Why Did Wholesale Inflation Rise In November? Blame Eggs

BjelicaS / Getty Images

BjelicaS / Getty Images


Key Takeaways

  • November wholesale inflation data showed an unexpected increase. Producer Price Index (PPI) increased by 0.4% compared to the prior month.

  • The spike in prices of final goods was attributable to a more-than 54% jump in the price of eggs as disruptions from bird flu pushed food prices higher.

  • Overall, economists didn’t see enough evidence in the PPI report to keep the Federal Reserve from cutting interest rates at its upcoming December meeting.



Wholesale prices increased faster than economists expected in November, logging the largest jump in the annual rate of wholesale inflation since February 2023—thanks in part to chicken eggs.

The Producer Price Index (PPI) for November showed wholesale prices for goods and services rose by 0.4% when compared with the prior month, resulting in an increase of 3% in the annual inflation rate, according to the Bureau of Labor Statistics. This latest data follows an increase in wholesale prices in October.

Higher Food Prices Drive Up November Inflation

Prices for chicken eggs jumped more than 54%, significantly contributing to a 0.7% increase of the overall price of goods when compared with the prior month.

Egg prices soared in recent months partly due to a strain of avian influenza, or bird flu, that hit the nation's commercial poultry flocks. Inflation at the wholesale level can carry over to consumer prices. Prices for fresh and dry vegetables, fresh fruits and melons, and processed poultry, alsoalso rose, BLS said.

Taking away the jump in food prices, some economists said that the wholesale inflation report showed that prices were broadly under control. The spike in producer prices isn’t expected to keep the Federal Reserve from cutting interest rates next week.

“PPI isn’t so scary once you get past the headline. While the underlying data quell fears of a new inflation surge, they don’t suggest a quick fall to two percent either,” wrote Oren Klachkin, economist at Nationwide Financial Markets. “Producer prices, and the broader inflation complex, are on an extended and bumpy journey to the Fed’s goal.”

Producer Prices Hotter than Expected, But Rate Cut Still in Sight

Economists were anticipating slower wholesale inflation, with Wells Fargo projecting a 2.7% annual inflation rate from the November PPI report. The report follows yesterday’s release of the November Consumer Price Index (CPI), which showed an uptick in inflation that was in line with economist projections.

Without volatile food and energy costs included, the monthly “core” PPI reading rose at a more modest 0.2%. Wholesale services inflation also rose at a 0.2% monthly rate, prompting some economists to view the overall jump in the PPI as temporary.