Wholesale Inflation Rates Suggests No Relief for Consumers Soon

The latest wholesale inflation report is signaling that prices have not yet peaked for American consumers. Here is what the data revealed and why those feeling the pinch might face further concerns.

Wholesale Inflation Rate Report Signals More Bad News for Consumers

Wholesale inflation is refusing to budge, according to the latest Producer Price Index (PPI) report from November. According to the U.S. Bureau of Labor Statistics (BLS), prices jumped by 0.2% in November when compared to October. This translates to an annual rate of 3%. The information was released on Wednesday; however, it was delayed due to the lingering impacts of last fall's historic federal government shutdown.

The increase in wholesale inflation was partially blamed on the surge of energy prices. The data also demonstrates that retailers and wholesalers will continue to bear the brunt of the increasing cost of goods at the hands of the Trump administration's tariffs on imported goods. Samuel Tombs, chief US economist at Pantheon Macroeconomics, explained to investors on Wednesday that retailers are trying to shield American consumers from paying the price for the increased cost of goods coming from the steep tariff program.

PPI tracks the average change in prices that producers receive for services and goods. The index is closely watched as it often indicates what consumers should expect to see for prices in the coming months. Economic experts caution that this bellwether may be muted since the BLS was not able to release a separate PPI report for the month of October due to the 43-day shutdown that disrupted data tracking. That said, the PPI was still able to incorporate the full data report for October in its November reporting.

October's data benefited from falling energy prices, cushioning the blow of the numbers from that month. Producer prices only inched up 0.1% from September to October, compared to an increase of 2.8% annually at the time.

Wednesday's numbers also showed that wholesale inflation was higher than previously reported for September. The latest PPI report revised the annual rate for that month from 2.7% to 3%.

The data also excluded food and energy from the overall numbers to determine how the economy was faring without these categories that tend to exhibit unusual price shifts. When these categories were eliminated, core PPI rates increased by 0.3% in October. The exclusion resulted in flat prices in November.

Impact of Tariffs on PPI Data

The PPI data also gives economists more information about how American businesses are approaching the higher costs as a result of the tariffs. Trade services were down by 0.8% in October and November. This figure measures overall profit margins for retailers and wholesalers. The dip could indicate that businesses are taking on the higher costs to their bottom line rather than passing them to the consumer. In fact, some businesses are reducing prices instead of raising them, in an effort to appeal to consumers who are struggling with the weakened labor market.

Some economists had predicted that the impacts of the tariffs would start to wane by this point in the cycle. However, the latest PPI report is raising concern that experts were premature in their belief that the peak of this influence has passed.

The numbers are even more concerning when economists exclude trade services along with food and energy indicators. The exclusion of all three factors show prices were 0.7% higher in October and 0.2% in November. This brings the annual rate of wholesale inflation up to 3.4% in October and a whopping 3.5% in November. The annual rate for PPI without energy, food, and trade services factored in represents the highest it has been in eight months.

The Wednesday report also gives signals connected to the Federal Reserve’s preferred inflation gauge. This gauge relies on several PPI data points to determine the Personal Consumption Expenditures (PCE) price index. The Consumer Price Index (CPI) report from the fourth quarter combines with the latest PPI data to indicate that the PCE price index is inching up over the 2% target rate from the Fed.

The October and November PCE report will be released on January 22. This report will provide further insight into how Americans are spending in the tough economy.

Economists will not have to wait as long for the next round of whole inflation data as federal reporting agencies begin to catch up from the delay triggered by the government shutdown. The December PPI report is expected to be available for analysis on January 30.

Looking for stories that inform and engage? From breaking headlines to fresh perspectives, WaveNewsToday has more to explore:

• Understanding the Impetus Behind the Iran Protests and How it May Impact the U.S. - Wave News

• Defense, Damage & Decisions: A Brutal AFC Wild Card Weekend - Wave News

• Inflation Rate Pulls Back Slightly—What Economists Are Predicting - Wave News

• TikTok Ban Deadline Looms: Trump, Courts, and What Happens Next - Wave News

• Tension Building Between President Trump and Seth Meyers - Wave News