Businesses Feel the Heat as Prices Climb

Last November, businesses in the US faced a tough time. Prices for goods and services shot up, and this trend might mean that consumers will soon see higher prices too. The latest numbers show that wholesale prices went up by 0. 2% in November compared to the month before. This means that over a year, prices have gone up by 3%. This is a big deal because it shows that inflation is still a problem. The data also hints that businesses are taking a hit from the tariffs on imported goods. Retailers are trying to keep prices down for consumers, but it's getting harder. This is because the tariffs are making things more expensive for businesses. The Producer Price Index (PPI) is a key indicator. It shows how much producers are getting for their goods and services. This can give us a clue about what consumers might pay in the future. Because of the government shutdown, the data for October was delayed. But unlike other reports, the PPI was able to include full data for October. In October, prices went up by 0. 1% from September and by 2. 8% over a year. The report also revised September's numbers. The annual rate was higher than previously thought, at 3% instead of 2. 7%. When you look at prices without food and energy, things get even more concerning. In November, these core prices went up by 0. 3% in October and stayed flat in November. But over a year, they went up by 2. 9% in October and 3% in November.Businesses are struggling with higher costs due to tariffs. The data shows that trade services, which measure profit margins for wholesalers and retailers, were down by 0. 8% in both October and November. This suggests that businesses are absorbing some of the higher costs rather than passing them on to customers. As the job market weakens, wage growth slows, and economic disparities grow, some businesses are cutting prices instead of raising them. This is because more Americans are struggling with affordability. When you exclude food, energy, and trade services, the underlying trend is even worse. Prices shot up by 0. 7% in October and 0. 2% in November, lifting the annual rate to 3. 4% in October and 3. 5% in November. This is the highest annual rate in eight months. The latest PPI report gives clues about the Federal Reserve’s preferred inflation gauge. Several PPI data points feed into the Personal Consumption Expenditures (PCE) price index. The data suggests that the PCE price index is moving further from the Fed’s 2% target rate. The October and November PCE report, which includes the latest data on spending, is scheduled for release on January 22. The December PPI report is expected on January 30.