US Producer Price Inflation Nears Double-Digits

US producer prices rose far more than expected in November, data out Tuesday showed.

The 0.8% MoM rise exceeded all estimates from more than four-dozen economists. The range was 0.3% to 0.7%.

Prices for final demand rose 9.6% YoY (figure below), a harrowing print that easily topped the 9.2% consensus.

The ex-food, energy and trade print was 6.9% YoY. Both 12-month advances were the largest since data collection began (in 2010 for the headline index and in 2014 for the trimmed gauge).

The monthly increase in the final demand services index (0.7%) was the eleventh straight (figure below).

The government noted that prices for portfolio management advanced 2.9%, while indexes for guestroom rentals, securities brokerage, dealing, investment advice, fuels and lubricants retailing, airline passenger services and transportation of freight and mail, all moved higher.

November’s 1.2% gain on the goods gauge was the third straight monthly increase of 1% or more.

A gauge of processed goods for intermediate demand jumped almost 27% YoY (figure below).

You can thank industrial chemicals, natural gas, gasoline, electric power, fabricated structural metal products and hot rolled steel for that, the government remarked.

Obviously, the above suggests inflation pressure will remain in the proverbial pipeline for the foreseeable future. That, in turn, will stoke bets on more aggressive Fed tightening and could pressure risk assets.

While not “surprising,” per se, Tuesday’s PPI data just reinforced inflation concerns and dealt yet another blow to the “transitory” narrative, which seemed gratuitous considering it “retired” last month.