Following the recent consumer price inflation data that aligned with expectations, the Labor Department released another report on Thursday confirming that U.S. producer prices similarly rose according to economist forecasts in October.
The report indicated that the producer price index for final demand increased by 0.2% in October, after a revised 0.1% growth in September. This matched economists’ expectations, which had predicted this 0.2% rise, in contrast to the previously reported stagnation for September.
The data also revealed that the annual growth rate of producer prices accelerated to 2.4% in October, up from a revised 1.9% in September. Economists had anticipated a slightly smaller increase, predicting an acceleration to 2.3% from the initial report of 1.8% in September.
The moderate monthly increase in producer prices was primarily driven by a rise in service costs, which grew by 0.3% in October compared to the 0.2% increase in September. A significant portion of this growth was attributed to a 0.3% rise in prices for services excluding trade, transportation, and warehousing, with portfolio management prices jumping 3.6%.
Additionally, transportation and warehousing service prices increased by 0.5%, while trade service prices edged up by 0.1%.
Conversely, energy prices saw a decline of 0.3% in October after a substantial 2.8% drop in September, and food prices slightly decreased by 0.2% following a 1.0% rise in the previous month. Despite these decreases, goods prices inched up by 0.1%, largely due to an 8.4% surge in carbon steel scrap prices.
Excluding food, energy, and trade services, core producer prices rose by 0.3% in October following a 0.1% increase in September. The annual growth rate of core producer prices also accelerated, reaching 3.5% in October compared to 3.3% in September.
Nationwide Financial Markets Economist, Oren Klachkin, commented, “The uptick in both the headline and core PPI indices underscores ongoing concerns about inflation, particularly in light of Wednesday’s CPI report. While these figures indicate potential inflationary pressures, they do not entirely conflict with the narrative of gradual disinflation. Nonetheless, we remain alert for any upcoming challenges. Although PPI data complicates the Federal Reserve’s policy outlook, it doesn't decidedly shift their easing bias.”
Earlier, a separate report from the Labor Department on Wednesday confirmed that consumer prices in the U.S. rose as anticipated in October.
According to the report, the consumer price index saw a 0.2% increase in October, consistent with the rises observed in the preceding three months, as well as expectations.
The annual consumer price growth rate accelerated to 2.6% in October from 2.4% in September, aligning with economist forecasts. When excluding food and energy prices, core consumer prices grew by 0.3% in October, matching the increases seen in the prior two months and meeting expectations. The annual core consumer price growth remained steady at 3.3%, also in line with projections.
