**MNI 5 THINGS: US Nov PPI Above-Expected +0.1%, Core +0.3%>

--5 Things We Learned From The November PPI Data

By Kevin Kastner, Harrison Clarke, and Shikha Dave

     WASHINGTON (MNI) - The following are the key points from the 

Producer Price Index data for November released by the Labor Department 

Tuesday: 

     - The November PPI data were above expectations, with a 0.1% gain 

for the overall reading and a 0.3% increase for the ex-food and energy 

reading, showing solid growth even outside the most volatile components. 

Energy price plunged, but food prices and trade services both posted 

gains. Removing those categories, PPI ex. trade services, food, and 

energy was up 0.3% after a 0.2% gain in the previous month. 

     - Within the core, there was a noticeable increase for cellular 

services (record +4.7%), but declines for computers (-0.7%) and 

passenger cars (-0.1%). 

     - Even as the headline figure was stronger than expected, the 

overall year/year rate of inflation pulled back in November. Overall PPI 

is now up 2.5% y/y after surging to 2.9% in October. At the same time, 

however, core PPI ticked up to 2.7% y/y vs 2.6% in October, and PPI ex 

food, energy and trade services stayed at 2.8%. 

     - The personal consumption price measure in the data, which some 

analysts use as a preview measure for the CPI and PCE price data, was 

down 0.1% overall and up 0.4% excluding food and energy after gains of 

0.8% and 0.6%, respectively, in October, suggesting softer readings for 

the other inflation data still to come for the month. Outside of food, 

energy and trade services, the personal consumption measure was up 0.3%. 

The year/year rates for all three measures remained well above 2%. 

     - Energy prices posted a 5.0% plunge in November (largest since 

Sept 2015) after a 2.7% gain in October, with a 14.0% drop in gasoline 

prices (largest since Feb 2016) a key factor. Residential natural gas 

rose 3.3% to provide some offset. Food prices rose 1.3% in the month on 

widespread gains, particularly vegetables, while the volatile trade 

services component was up only 0.3% in November after a 1.6% gain in 

October. 

     ** MNI Washington Bureau: 202-371-2121 ** 

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