U.S. Producer Prices Unchanged In November, Core Prices Unexpectedly Dip

With higher prices for goods offsetting lower prices for services, the Labor Department released a report on Thursday showing U.S. producer prices came in unchanged in the month of November.

The Labor Department said its producer price index for final demand was flat in November after climbing by 0.4 percent in October. Economists had expected prices to rise by 0.2 percent.

The report said prices for final demand goods rose by 0.3 percent in November, primarily reflecting a 1.1 percent jump in food prices. Energy prices also increased by 0.3 percent.

Excluding the increases in food and energy prices, core producer prices dipped by 0.2 percent in November after rising by 0.3 percent in October. Core prices had been expected to inch up by 0.2 percent.

The unexpected drop in core prices came as prices for final demand services slid by 0.3 percent in November after climbing by 0.3 percent in the previous month.

Prices for trade services slumped by 0.6 percent, while prices for transportation and warehousing services fell by 0.3 percent and prices for other services edged down by 0.1 percent.

The report showed the annual rate of producer price growth was unchanged at 1.1 percent, while the annual rate of core price growth slowed to 1.3 percent in November from 1.6 percent in October.

"Overall, the November PPI figures underline that price pressures in the inflation pipeline are still easing," said Michael Pearce, Senior U.S. Economist at Capital Economics.

He added, "Against that backdrop, the Fed is going to remain on hold a lot longer than just through the end of 2020, as policymakers signaled yesterday."

A separate report released by the Labor Department on Wednesday showed U.S. consumer prices increased by slightly more than anticipated in the month of November.

The Labor Department said its consumer price index rose by 0.3 percent in November after climbing by 0.4 percent in October. Economists had expected prices to edge up by 0.2 percent.

Excluding food and energy prices, core consumer prices crept up by 0.2 percent in November, matching the uptick seen in the previous month as well as economist estimates.

Consumer prices in November were up by 2.1 percent compared to the same month a year ago, reflecting a notable acceleration from the 1.8 percent increase in October. The annual rate of core price growth was unchanged at 2.3 percent.