WASHINGTON: US producer prices increased a bit more than expected in November, but the underlying trend in inflation is moderating, which could allow the Federal Reserve to slow its pace of interest rate hikes next week.

The producer price index for final demand rose 0.3% last month, the Labor Department said on Friday. Data for October was revised higher to show the PPI gaining 0.3% instead of 0.2% as previously reported. In the 12 months through November, the PPI increased 7.4% after advancing 8.1% in October.

Economists polled by Reuters had forecast the PPI climbing 0.2% and rising 7.2% year-on-year.

The report came ahead of the Fed’s policy meeting next Tuesday and Wednesday. Fed Chair Jerome Powell said last month that the US central bank could scale back the pace of its interest rate hikes “as soon as December.” The Fed is in the midst of the fastest rate-hiking cycle since the 1980s.

Inflation is gradually slowing as supply chains ease and demand for goods ebbs. The Institute for Supply Management last week reported that its measure of prices paid by factories for goods dropped to a 2-1/2 year low in November.

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But the shift in spending to services means overall inflation will remain elevated for a while. Some of the price pressures are seen coming from the labor market, with wage growth accelerating in November.

That has left economists expecting the Fed will continue tightening monetary policy and lift its policy rate to a level higher than the recently projected 4.6%, where it could stay for some time. The central bank has raised the policy rate by 375 basis points this year from near zero to a 3.75%-4.00% range.

Excluding the volatile food, energy and trade services components, producer prices gained 0.3% in November. The so-called core PPI rose 0.2% in October.

In the 12 months through November, the core PPI advanced 4.9% after increasing 5.4% in October.