A measure of wholesale prices rose more than expected in November amid questions about whether progress in reducing inflation has slowed, the Bureau of Labor Statistics reported Thursday.

The producer price index (PPI), which measures what producers receive at the final demand level for their products, rose 0.4% for the month, above the Dow Jones consensus estimate of 0.2%. On an annual basis, PPI rose 3%, the largest increase since February 2023.

However, excluding food and energy, core PPI rose 0.2%, meeting forecast. Even after deducting trading services, the PPI increase was only 0.1%. The year-over-year increase of 3.5% was also the strongest since February 2023.

In other economic news, the Labor Department reported Thursday that initial unemployment insurance claims totaled a seasonally adjusted 242,000 in the week ending Dec. 7, well above the 220,000 forecast and up 17,000 from the previous period.

On the inflation front, the news was mixed.

Prices of final demand goods rose 0.7% month-on-month, the strongest increase since February this year. According to the BLS, about 80% of that move was due to a 3.1% increase in food prices.

Within the grocery category, chicken eggs rose 54.6%, joining an overall increase in items such as dried vegetables, fresh fruit and poultry. Egg prices at the retail level rose 8.2% month-over-month, 37.5% higher than a year ago, the BLS said Wednesday in a separate consumer prices report.

The cost of services rose 0.2%, boosted by a 0.8% increase in trading.

The PPI release comes a day after the BLS reported that the Consumer Price Index (CPI), a commonly cited indicator of inflation, also rose in November to 2.7% on a 12-month basis and 0.3% on a 12-month basis Monthly comparison.

Despite seemingly stubborn inflation, markets largely expect the Federal Reserve to cut its federal funds rate next week. Traders in futures markets expect interest rates will almost certainly be cut by a quarter of a percentage point when the Federal Open Market Committee concludes its meeting on Wednesday.

Following the release, economists generally viewed this week’s data as mostly positive, with underlying indicators still suggesting that inflation is being eased enough to eventually bring the Fed back to its 2% target.

The Fed uses the Commerce Department’s Personal Consumption Expenses Price Index (PCE) as its primary inflation measure and forecasting tool. However, data from the CPI and PPI are included in this measurement.

An Atlanta Fed tracker puts November PCE at 2.6%, up 0.3 percentage points from October, and core PCE at 3%, up 0.2 percentage points. The Fed generally believes core interest rates are a better long-term indicator. Some economists said details in the report suggest a smaller monthly increase in PCE inflation than they had previously expected.

“It appears that only an exogenous shock such as dramatic changes in tariff policy would be able to derail the supply-side contributions to the near-term return of inflation to the Federal Reserve’s average target of 2.0%,” PNC chief economist Kurt Rankin wrote.

Stock market futures were slightly negative following the economic news. Treasury yields were mixed, while the chance of a rate cut next week was still about 98%, according to CME Group.

One reason markets expect the Fed to cut interest rates, even with stubborn inflation, is that Fed officials are increasingly concerned about the job market. Nonfarm payrolls have seen increases every month since December 2020, but the increase has slowed recently and news broke Thursday that layoffs could increase as unemployment lasts longer.

The number of applications for unemployment benefits reached their highest level since early October, while the number of ongoing claims, which is a week behind, rose slightly to 1.89 million. The four-week moving average of ongoing claims, which smooths out weekly volatility, rose to its highest level in just over four years.