U.S. producer prices recorded their biggest increase in five months in November amid rising costs for services, pointing to steadily rising inflation pressures.
The Labor Department said on Wednesday its producer price index for final demand increased 0.4 percent last month, the largest gain since June, after being unchanged in October.
In the 12 months through October, the PPI rose 1.3 percent, the biggest gain since November 2014. The PPI rose 0.8 percent in the 12 months through October.
Economists polled by Reuters had forecast the PPI rising 0.1 percent last month and accelerating 0.9 percent from a year ago.
A 0.5 percent increase in the cost of services accounted for more than 80 percent of the rise in the final demand PPI last month. The increase, which followed a 0.3 percent decline in October, was the largest since January.
Producer prices are rising as some of the drag from last year's plunge in oil prices continues to fade. Oil prices are hovering around $50 per barrel, which could help offset some of the anticipated dampening impact on inflation from the dollar's renewed strength.
The dollar has gained 3.5 percent against the currencies of the United States' main trading partners since the Nov. 8 election of Donald Trump as the next president. The greenback's rally had appeared to fade for much of the year
Inflation is steadily moving toward the Federal Reserve's 2 percent target.
Energy prices fell 0.3 percent in November after climbing 2.5 percent the prior month. Wholesale food prices rose 0.6 percent after declining 0.8 percent in October.
Health care costs gained 0.2 percent last month after increasing 0.3 percent in October. The cost of hospital inpatient care increased 0.2 percent after rising 0.3 percent in October. These health care costs feed into the Fed's preferred inflation measure, the core personal consumption expenditures (PCE) index.
Last month, the volatile trade services component — which measures changes in margins received by wholesalers and retailers — shot up 1.3 percent. That was the biggest increase since January and snapped four straight months of declines.
A key gauge of underlying producer price pressures that excludes food, energy and trade services advanced 0.2 percent. That followed a 0.1 percent dip in October.
The so-called core PPI increased 1.8 percent in the 12 months through November, the largest rise since August 2014. The core PPI increased 1.6 percent in the 12 months through October.