Producer prices in the U.S. unexpectedly showed a modest uptick in the month of November, according to a report released by the Labor Department on Tuesday.
The Labor Department said its producer price index for final demand inched up by 0.1 percent in November after climbing by 0.6 percent in October. Economists had expected prices to be unchanged.
Prices for food showed another significant increase, surging up by 1.3 percent in November after jumping by 1.0 percent in October.
On the other hand, the report said energy prices plunged by 5.0 percent in November following a 2.7 percent spike in the previous month. Gasoline prices plummeted by 14.0 percent.
Excluding food and energy prices, core producer prices rose by 0.3 percent in November after rising by 0.5 percent in October. Core prices had been expected to edge up by 0.1 percent.
The bigger than expected increase in core producer prices came as prices for final demand services climbed by 0.3 percent in November after soaring by 1.6 percent in October.
A 1.2 percent jump in prices for transportation and warehousing services led the way higher, while prices for trade service rose by 0.3 percent and prices for other services inched up by 0.1 percent.
Despite the modest monthly increase, the report said the annual rate of producer price growth slowed considerably to an eleven-month low of 2.5 percent in November from 2.9 percent in October.
On the other hand, the annual rate of core producer price growth accelerated to 2.7 percent in November from 2.6 percent in October.
"The subdued 0.1% m/m rise in producer prices in November was mostly due to the sharp drop back in gasoline prices, but the rise in underlying services prices was more subdued too," said Michael Pearce, Senior U.S. Economist at Capital Economics.
He added, "With pipeline inflationary pressures moderating, we think there is little risk of core consumer price inflation rising further over the coming year or so."
The Labor Department is scheduled to release a separate report on consumer prices in the month of November on Wednesday.
Consumer prices are expected to come in unchanged during the month, while core consumer prices are expected to rise by 0.2 percent.
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