US producer prices unchanged in November

WASHINGTON (Reuters) - U.S. producer prices were unexpectedly unchanged in November as a decline in the cost of energy products more than offset higher food prices, indicating that inflation at the factory gate continued to subside.

The unchanged reading in the producer price index for final demand last month reported by the Labor Department's Bureau of Labor Statistics on Wednesday followed revised 0.4% drop in October. The PPI was previously reported to have declined 0.5% in October.

Economists polled by Reuters had forecast the PPI would gain 0.1%. In the 12 months through November, the PPI rose 0.9% after advancing 1.2% in October.

Data on Tuesday showed consumer prices edged up in November amid stubbornly high rental costs. Though inflation remains above the Federal Reserve's 2% target, price increases are becoming less broad based. U.S. central bank officials are due to conclude their two-day meeting on Wednesday.

The Fed is expected to keep its policy rate unchanged in the current 5.25%-5.50% range, having raised it by 525 basis points since March 2022. Economists believe the Fed is done hiking interest rates this cycle, and financial markets are expecting a rate cut as soon as May. Rate cut bets have been pushed back from March following last Friday's stronger-than-expected employment report as well as November's slightly warmer inflation readings.

The narrower measure of PPI, which strips out food, energy and trade services components, edged up 0.1% last month after rising by the same margin in October. The so-called core PPI increased 2.5% on a year-on-year basis in November after rising 2.8% in October.

(Reporting by Lucia Mutikani; Editing by Chizu Nomiyama)