US producer prices rise moderately in October, but inflation broadens out
TLT•The Producer Price Index rose 0.3% in October, below economists’ 0.4% forecast, while its year-over-year increase reached 6.5%, the largest since November 2022. Food prices rose 1.3%, and goods prices excluding food and energy increased 0.5%.
1. Producer prices increase
The Producer Price Index for final demand rose 0.3% in October after an upwardly revised 1.4% increase in September. Economists had forecast a 0.4% rise. The index advanced 6.5% year over year, its largest annual gain since November 2022.
2. Food and freight costs rise
Goods prices increased 0.5%, led in part by a 1.3% jump in food prices. Core goods prices also rose 0.5%, their biggest gain since May. Services prices increased 0.2%, with transportation and warehousing costs up 2.0% and truck freight transportation up 3.9%.
3. Rate expectations fluctuate
Financial markets wavered between expectations of a 25-basis-point Federal Reserve rate increase in December and the possibility of a half-percentage-point increase. Economists estimated core PCE inflation rose 0.3% in October and forecast a 3.2% year-over-year increase.
