Wholesale prices in the U.S. increased more than anticipated in November, led by a jump in fuel costs and a rebound in truck prices.
The 1.8% increase in prices paid to factories, farmers and other producers was more than twice as large as anticipated and followed a 0.3% gain in October, according to Labor Department data released today in Washington. Excluding food and fuel, so-called core prices also exceeded the median estimate of economists surveyed by Bloomberg News.
Near-record excess capacity and a jobless rate that is projected to average 10% in 2010 may prevent suppliers from passing on a rebound in commodity costs even as the economy recovers. Federal Reserve policy makers, meeting this week, have said they expect inflation to remain "subdued" in coming months, allowing them to keep interest rates low.
Factories in the New York region expanded in December less than anticipated, indicating manufacturing may provide less of thrust for the economy in coming months, figures from the Fed Bank of New York also showed today. The bank's general economic gauge, known as the Empire State Index, fell to a five-month low of 2.6 from 23.5 in November. Readings greater than zero signal expansion.
Economists forecast prices would rise 0.8%, according to the median of 77 projections in a Bloomberg News survey. Estimates ranged from increases of 0.3% to 1.6%.
Prices excluding food and energy were forecast to rise 0.2% after a 0.6% drop in October that was the largest decline in more than three years, according to the survey median.
Compared with a year earlier, wholesalers received 2.4% more for their goods, the first year-over-year increase since November 2008, today's report showed. Core costs were 1.2 percent higher than a year earlier.
Year-over-year costs will probably climb in coming months as the plunge in fuel prices at the depths of the recession in late 2008 drops out of the calculations.
Compared with October, energy costs rose 6.9%, led by an 18% gain in the cost of heating oil. The cost of crude has since dropped.
The cost of food increased 0.5% from October, led by gains in fruits and vegetables.
About 75% of the gain in producer prices last month reflected increase in food and fuel costs, the Labor Department said. The increase in core costs mainly reflected a 4.2% jump in light truck prices that followed a 5.2% drop in October. Vehicle costs often become volatile when the government switches to tracking new models.
Producer prices are one of three monthly inflation gauges reported by the Labor Department. The cost of imported goods rose 1.7% in November and increased 0.7% excluding energy. The government is scheduled to release its consumer price report tomorrow.
U.S. central bankers meet today and tomorrow for their final gathering of the year. At their last meeting in November, policy makers repeated their pledge to keep the benchmark interest rate low for an "extended period." They also specified for the first time, last month, that policy will stay unchanged as long as inflation expectations are stable and unemployment remains elevated.
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