US producer prices jump but not chemicals, resins

19 December 2006 14:42  [Source: ICIS news]

WASHINGTON (ICIS news)--The US producer price index rose sharply in November by 2%, although chemical and resin prices fell, the Labor Department said on Tuesday, raising inflation fears and the prospect of higher interest rates.

 

The 2% jump in producer prices - also known as wholesale prices - in November is the sharpest increase in three decades and followed declines of 1.3% in September and 1.6% in October.

 

The department said industrial chemicals declined 2% in November compared with October and were off 4.6% compared with producer prices for industrial chemicals in November last year.

 

Plastic resins and materials saw producer prices drop by 2.4% in November from October, the department said, and they were down by 5.2% compared with November 2005.

 

For wholesale prices in general, the department said November’s sharp 2% increase was broad-based but heavily influenced by prices for energy goods, which rose 6.1% in November after falling 5% in October.

 

However, even with the more volatile prices for foods and energy backed out of the index, the so-called core index of producer prices rose 1.1% in November, a marked turnaround from the nearly 1% decline in October.

 

In its recent monetary policy statements the Federal Reserve, the US central bank, has cautioned about the continuing economic risks posed by inflationary pressures, hinting broadly that it would be ready to raise interest rates if inflation appeared to be gaining.

 

The increase in November’s producer prices, which ultimately will be reflected in prices consumers will have to pay, raises the prospect that the Federal Reserve will increase interest rates when it holds its next rate-setting meeting on 30-31 January.

By: Joe Kamalick
+1 713 525 2653

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