(CN) – Gas prices dropped 29 cents per gallon in November while the wholesale cost of American goods and services ticked up only slightly in a sign of softening inflation pressures, the Labor Department said Tuesday.
The producer price index, which measures cost changes of products before they’re sold to the U.S. public, rose just 0.1 percent last month. Overall, wholesale prices have risen 2.5 percent since this time last year. That is the smallest annual increase of 2018.
The wholesale prices indicated a receding of inflation pressures from this time last year, which could impact the Federal Reserve’s decision on when to increase short-term interest rates.
Gas prices, meanwhile, plummeted 14 percent in November, the biggest drop since early 2016. The decrease is tied to the cost of oil, which went from $75 a barrel in October to $51.70 this week.
The average cost of gas nationwide is now $2.41 a gallon, which is a 29-cent drop from a month ago.
The 15-member Organization of the Petroleum Exporting Countries, or OPEC, is planning on cutting oil production by at least 1 million barrels per day to stabilize prices.
In June, the Federal Reserve raised its target interest rate to a range of 1.75 percent to 2 percent. The committee aims to keep inflation around 2 percent over the medium term to avoid sharp spikes in prices while also avoiding deflation, which tends to lower both prices and wages.
The Associated Press contributed to this report.