(Bloomberg, November 2010) — The prices that U.S. manufacturers paid rose more than was expected in November. It is a sign of how increasing input costs are fuelling already excessive consumer inflation. 

Labor Department data on Tuesday indicated that the final demand for food increased by 0.8% in February compared to the preceding month and rose 9.6% compared with a year ago. This was the highest figure back to 2010. 

This month’s jump was larger than July’s and outpaced the median estimate by economists in Bloomberg Survey that called for 0.5% growth. 

The so-called core PMI increased 0.7%, and was up by an unprecedented 7.7% from last year. Both the prices of goods and services increased last month.

As the Federal Reserve data strengthened expectations about tightening monetary policy in 2019, stock-index futures lost more.

Due to transportation bottlenecks as well as strong demand and labor shortages, materials costs have increased rapidly. Many companies have managed to pass these added costs onto customers by charging higher prices. The latest report indicates that there will be more consumer price hikes in the months ahead.   

The consumer price index grew 6.8% in the last month compared to a year earlier, which was the fastest annual growth rate for nearly 40 years. While first concentrated in a handful of categories associated with the economy’s reopening, inflation has broadened out. 

The larger-than-expected, sustained increase in inflation has put pressure on policy makers to act. As the Fed wraps up the year’s final meeting on Wednesday, it is expected to speed up the end of its bond-buying program. This would enable the central bank increase interest rates in the next year.

In the previous month, producer prices that exclude food, energy, or trade services rose 0.7%. The gauge rose 6.9% in comparison to a year ago.

The November increase in goods prices was 1.2% higher than a month ago. This is due to broad advancements that include iron and steel scrap and gasoline as well as fruits and vegetables.

The increase in services costs was due in part to an increase in the prices of investment portfolio management.

From a month prior, the cost of processed goods to intermediate demand increased by 1.5%. These prices reflect production costs earlier in the process pipeline. This is the biggest increase since 1974, as the difference in this measure was 26.5% compared to a year prior.