Cleaning & Restoration Breaking News

Wholesale Prices Rise 0.5 Percent in November

December 10, 2004
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WASHINGTON (AP) -- Wholesale prices climbed by 0.5 percent in November -- an improvement compared with the previous month's surge, but still fresh evidence that inflation is picking up as the economy gains momentum.

The increase in the producer price index, reported by the Labor Department on Friday, came after wholesale prices shot up by 1.7 percent in October, the biggest rise in more than 14 years.

"Inflation pressures are mounting in the U.S. economy," said Sherry Cooper, chief economist at BMO Nesbitt Burns.

The reading in November on the PPI, which measures the costs of goods before they reach store shelves, showed a larger advance than the tiny 0.1 percent rise that economists were forecasting. A big jump in residential natural gas prices along with some food products, such as fish, played a big role in lifting overall wholesale prices last month.

Excluding energy and food costs, which can swing widely from month-to-month, "core" wholesale prices rose by just 0.2 percent in November, the smallest increase in four months.

The latest snapshot of inflation added to the case that Federal Reserve Chairman Alan Greenspan and his colleagues will raise short-term interest rates again next week.

Wanting to make sure inflation doesn't become a danger to the economy, the Federal Reserve has boosted short-term interest rates four times this year. Analysts expect another quarter-point rate increase when the Fed meets on Tuesday. Such a move would leave a key rate at 2.25 percent.

The economy's soft patch in the spring and early summer had helped to keep wholesale prices relatively well behaved. Now with the economy expanding solidly, inflation probably will pick up as well, economists said. A weaker U.S. dollar also can put pressure on prices of imported goods, which gives U.S. producers more room to raise prices.

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