Wholesale inflation was softer than expected, retail sales moved higher in November

• Core PPI excluding food and energy was flat in November against expectations for a 0.2% gain, though headline PPI remained elevated at 3% year-over-year, above the Federal Reserve's 2% target
• Retail sales rose 0.6% in November, beating the 0.4% forecast, with broad-based gains across sectors including motor vehicles, building materials, and sporting goods stores all posting increases exceeding 1%
• Energy prices jumped 4.6% and accounted for more than 80% of the goods price increase in the PPI, while services prices remained flat for the month

Summary

Key Economic Data:

The U.S. Producer Price Index (PPI) rose 0.2% in November, below the 0.3% Dow Jones consensus but slightly higher than October's reading. Core PPI (excluding food and energy) remained flat versus expectations of a 0.2% gain. Despite modest monthly figures, headline PPI climbed 3% year-over-year, exceeding the Federal Reserve's 2% inflation target. Core PPI excluding trade services posted a 3.5% annual gain—the largest 12-month increase since March 2025.

The PPI increase was driven primarily by goods prices, which rose 0.9%, with energy prices jumping 4.6% accounting for over 80% of the gain. Services prices remained flat.

Retail Sales Performance:

Retail sales exceeded expectations, rising 0.6% in November versus the forecasted 0.4% increase. Excluding autos, sales climbed 0.5%, surpassing the 0.3% estimate. Strong gains were recorded across multiple sectors, including motor vehicles and parts dealers, building materials, gas stations, sporting goods stores, and other outlets—all posting increases exceeding 1%.

Year-over-year retail sales grew 3.3%, outpacing the 2.7% increase in an unspecified comparative metric.

Market Implications:

The softer-than-expected wholesale inflation data may provide modest relief for Federal Reserve policy considerations, though the elevated year-over-year PPI figures remain concerning relative to the 2% target. Robust retail sales demonstrate continued consumer spending strength, signaling economic resilience heading into year-end. The data presents a mixed picture of cooling monthly inflation alongside persistent annual price pressures and healthy consumer demand.