Producer Price Index Shows No Change

A jump in wholesale food prices and traction in service prices offset an expected drop in energy prices making for a 0.1 percent increase in headline producer prices for November which is 1 tenth higher than Econoday's consensus for no change.

Ex-energy readings are the key to today's report and show steady and moderate pressure, at a 0.3 percent rise when excluding food and energy and a 0.3 percent rise when excluding food, energy and trade services. Both of these also exceed Econoday's consensus.

Food prices, which have been soft, posted a second straight strong monthly gain at 1.3 percent following a 1.0 percent October increase. Still, year-on-year food prices at the wholesale level are up only 0.4 percent.

Service prices rose 0.3 percent which includes a 0.3 percent gain for trade services, a closely watched sub-component that tracks costs at the retail and wholesale levels and where the yearly rate is at 2.2 percent.

Energy prices, reflecting November's $20 drop in oil, were expected to fall sharply and did, down 5.0 percent in the month with the year-on-year rate, however, looking deceptively stable at 2.9 percent. Gasoline prices at the wholesale level fell 14.0 percent in November for a yearly 1.2 percent decline.

Though there are signs of traction in this report apart from energy, the wider trend is mixed with the overall year-on-year rate down 4 tenths to 2.5 percent. Yet today's report does show some pressure and may point to a slightly higher-than-expected result for tomorrow's CPI where no change is Econoday's consensus.