US November PPI Soars, Rate Cut Pricing Still "Set in Stone" This Week
The Producer Price Index (PPI) for the US in November has been released, showing a strong performance. It increased by 3.0% year-on-year, exceeding the previous expectation of 2.6%. The data for October has also been revised, from 2.4% to 2.6%. The core PPI, which excludes food and energy, rose by 3.4% year-on-year, also surpassing analysts' forecast of 3.2%, and the October data was revised from 3.1% to 3.4%.
The PPI for the service sector, excluding trade, transportation, and warehousing, remains at a high level of 4.6% year-on-year, indicating that underlying inflation remains quite stubborn. Some analysts have reservations about this data due to a 56% increase in egg prices, but the core PPI has accelerated to the highest level since February 2023, indicating that inflation pressure is quite widespread.
Although the inflation data appears very strong, the market has fully priced in a 25 basis point rate cut by the Federal Reserve next week. Many analysts predict that the Federal Reserve will take a relatively aggressive approach to rate cuts and then pause interest rate hikes in January.