Wholesale inflation rose at a record annual rate of 9.6% in November | Economy

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The inflation picture is no better, as the Labor Department reported on Tuesday that producer prices rose at a record pace in November.

The 0.8% monthly increase was higher than expectations of a 0.5% increase. The annual rate of increase of 9.6% was the highest for the series dating back to 2010 and above expectations of a 9.2% increase.

The wholesale price reading follows last week’s consumer inflation measure, which showed prices rose at an annual rate of 6.8% last month, the fastest pace in nearly 40 years old.

The PPI was led by price increases for scrap metal and scrap metal, as well as gasoline, fresh fruits and vegetables. Prices for goods rose 1.2% last month, while prices for services rose 0.7%.

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The Federal Reserve kicks off a two-day meeting on Tuesday in which it will consider scaling up its announced plan to cut $ 15 billion per month from its $ 120 billion monthly purchases of treasury bills and asset-backed securities. mortgage claims. The purchases are part of the Fed’s aggressive approach to combating the economic effects of the coronavirus.

Most observers expect the central bank to cut its purchases by $ 30 billion per month, but market watchers will also want to hear what Fed Chairman Jerome Powell has to say about the latest economic forecast for the Fed and inflation expectations in 2022 and beyond.

“If we look at Omicron’s so far short-lived decline, admittedly a leap of faith at this point, we end up with the overarching question of inflation and its direction,” the chief strategist wrote on Monday. from Ameriprise Markets, David Joy. “This is the main question the Fed will be facing this week. It has already started to decline, and Powell dropped the transient qualifier “

“And there is every reason to expect the pace of reduction to accelerate,” Joy added. “The Fed is encouraged to complete the cut by March, paving the way for more flexibility to raise rates as soon as it sees fit.”

Meanwhile, the NFIB’s Small Business Optimism Index rose 0.2 points in November to 98.4, but a record 59% of small business owners said they raised their prices last month. . This is the highest reading since 1979.

“As the end of the year approaches, the outlook for the economy is not encouraging for small business owners as lawmakers are proposing additional mandates and tax increases,” said Bill Dunkelberg, economist Chief of the NFIB. “Owners are also pessimistic, as many continue to deal with challenges such as runaway inflation and supply chain disruptions impacting their business at this time. “


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