Federal Reserve Chair Jerome Powell and company got one of their last data points on inflation before the Fed meets next week to hike interest rates: The November producer price index — that’s prices at the wholesale level — was up 0.3% over the month before and 7.4% from a year earlier.

That annual rate is down from October’s 8.1%. The core rate — excluding food and energy — was down too. Those numbers were a bit higher than economists were expecting, though, which made Wall Street wobble.

But what matters, said Scott Wren at Wells Fargo, is the trend line, the big picture. 

Wholesale inflation peaked at an annual rate of 11.5% back in March. It’s fallen seven of the last eight months and is now below 8%. 

“The trend is down,” Wren said. “You know, it’s moving in the right direction, maybe a little bit slower than what a lot of people would like, but it’s going to come down.”

Wholesale inflation is falling in part because people have reined in their post-pandemic buying splurge. Demand is down, so there’s less pressure to raise prices. 

There are also fewer bottlenecks getting stuff from factories to warehouses to stores, said Dean Baker at the Center for Economic and Policy Research.

“The New York Fed has a measure of supply-chain issues, that’s moving in the right direction,” he said. “Shipping costs are way down — they’re down around 80% from their peaks. So this is all going to mean less pressure on prices going forward.”

Still, the downward trend in inflation isn’t as crystal clear when you look at the core rate — without food and energy — or the month-to-month numbers, said Dan North at credit insurer Allianz Trade.

“You know, it’s nice to see headlines turning down on a year-over-year basis,” he said. “But I don’t think the evidence is strong enough, certainly not strong enough for the Fed to say, ‘Oh, OK, we’re getting towards closing here.’”

North expects the Fed to keep raising interest rates until it’s clear that inflation’s heading down, and staying there.