Wholesale inflation fell by 2.2% in November, the US Bureau of Labor Statistics reported today, completing a fourth straight monthly decline. The consensus estimate had been for a 2.0 percent drop following on from October’s record drop of 2.8%.

PPI MoM for the last 12 reporting periods

Leading the declines in November were energy prices. After a 12.8% drop in October, energy was down 11.2% for the month of November. Liquefied petroleum gas and home heating oil accelerated declines in November, down 25.7 and 23.3 percent respectively after 24.9 and 9.6% declines one month earlier. Declines slowed in residential natural gas and unleaded premium and mid-premium gasoline.

Prices for consumer foods came in unchanged after a fall of 0.2% in October. Within the index, eggs posted the sharpest monthly fall, down 18.2% with milled rice and pork both down 5.3%. Fresh fruit and vegetables were up by 2.1 and 3.8 percent respectively.

The Producer Price Index shows that wholesale prices are 0.4% higher than they were at the same time last year. However, this has fallen sharply from the peak of 9.9% in July and 5.2% just one month ago. Indeed, the current yearly figure is the lowest seen since January of 2007 and is further evidence that price pressures are falling away sharply in the US.

Elsewhere the Core PPI was up 0.1% MoM and inline with economists’ expectations. Traders had been expecting a moderation following the 0.4% seen in October. On a yearly basis the core number, which strips out the volatile food and energy components, is up by 4.2%.

Aside from the headline number for finished goods the index for intermediate goods fell by a record 4.3% while crude goods were down by 12.5%. Last month Intermediate goods dropped by 3.9% while crude goods fell by 18.6%.

Canadian Consumer Price Index followed the example set by the US earlier in the week and dropped sharply in October. Statistics Canada reported a 1.0% MoM fall in the headline number while the Core CPI also dropped, off by 0.2%.

The fall in CPI represents the largest decline in almost 50 years. This brings the YoY rate down to 2.6%. In September the yearly rate stood at 3.4 percent. Core CPI remained at 1.7%, below the 1.9% that had been expected.

The largest contributing factor to the fall in consumer prices was gasoline. On a monthly basis prices fell by 13.4%. This represents the sharpest decline since June 1959. However, they remain 13.3% higher on the year, down from 26.5% in the previous month.

Food prices continue to gain momentum, up 6.1% for the 12 months ending in October after the 5.6% increase in September.

Today’s data is likely to have little effect on the BOC’s monetary Policy decisions. The Bank has made it perfectly clear that it intends to cut interest rates, with a move highly likely at the December 9th meeting. The BOC expects consumer inflation to fall to below 1 percent in 2009.