November saw a sharp rise in wholesale prices, with the Producer Price Index (PPI) increasing by 0.4%, surpassing economists' expectations. The spike was primarily driven by a surge in food prices, notably a 54.6% increase in the cost of chicken eggs. The overall PPI for the year rose by 3%, up from a revised 2.6% in October and the largest increase since February 2023.
According to the Bureau of Labor Statistics (BLS), higher costs for fresh and dry vegetables, fruits, processed poultry, non-electronic cigarettes, and residential electric power also contributed to the uptick. The jump in egg prices was attributed to the ongoing bird flu outbreak.
This report follows Thursday’s release of the Consumer Price Index (CPI) for November, which showed inflation running at 2.7%, slightly above October’s 2.6%. Although inflation remains above the Federal Reserve's 2% target, most analysts expect the central bank to proceed with a rate cut when it meets next week. However, some predict that interest rate reductions will slow in 2025.
David Page, head of macro research at AXA Investment Managers, forecasts that the Fed will adopt a cautious approach after its expected December rate cut. "There's a lot of uncertainty surrounding the economy with the new administration taking office," Page said.
As the Biden administration prepares to leave office, the persistence of inflation could pose challenges for both outgoing President Joe Biden and incoming President Donald Trump. Trump, who was elected partially on his promise to combat rising prices, has proposed tax cuts and significant tariffs on imports—measures economists warn could push inflation higher in the short term.
Looking ahead, Clark Bellin, president and chief investment officer at Bellwether Wealth, noted that next week’s Fed meeting could be a key market catalyst. "The Fed will also provide guidance about its interest rate plans in 2025, which could help determine the trajectory of stocks next year," Bellin said.
Despite the inflationary pressures, many expect the Fed to maintain a more cautious stance, balancing its response to current inflation trends with broader economic uncertainties.