Decline in Energy Prices Continues to Pull PPI Down in November

Decline in Energy Prices Continues to Pull PPI Down in November

The Producer Price Index (PPI) fell 2.2 percent in November, driven by a sharp drop in energy prices of 11.2 percent. Core PPI, which excludes food and energy prices, rose 0.1 percent showing overall inflation is moderating. The Fed still has the green light to ease policy at the December 16th FOMC Meeting.

Headline PPI Fell for the Fourth Consecutive Month

Headline PPI fell 2.2 percent in November with energy prices falling 11.2 percent on the month. Consumer goods fell 2.9 percent driven by a 25.7 percent fall in gasoline prices. West Texas crude oil fell roughly 20 percent in November. As global economic growth trends downward, wholesale price inflation should be less of a problem in the coming months.

Core PPI Rose, but Pipeline Prices Are Easing

Core PPI rose 0.1 percent on the month, showing overall inflation is moderating. Core intermediate PPI is still elevated at 6.4 percent year-over-year. However, the pace of increases in pipeline price is slowing. Prices for core intermediate goods fell 2.3 percent, their fourth consecutive decline.

Total crude goods, excluding food and energy, fell 20.4 percent.

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