U.S. producer prices rose 6.5 percent in October from a year earlier, the largest annual increase since November 2022, as goods inflation accelerated despite a decline in energy prices.
The Labor Department said Friday that its producer price index for final demand increased a seasonally adjusted 0.3 percent from September, slightly below the 0.4 percent increase economists surveyed by Econoday had forecast. The annual increase was also slightly below the 6.6 percent expected.
September’s increase was revised up to 1.4 percent from an initially reported 1.3 percent, underscoring the size of the preceding month’s inflation surge. Prices had risen 0.4 percent in August.
Goods prices increased 0.5 percent in October and were up 10.2 percent from a year earlier, the largest annual advance since October 2022. That marked an acceleration from September’s reported 9.8 percent annual increase.
The monthly goods increase came despite a 7.9 percent decline in diesel fuel prices and a 0.1 percent drop in final demand energy prices overall. Gasoline prices rose 0.5 percent, sharply slower than September’s 20.6 percent surge.
More than 60 percent of October’s goods increase came from products excluding food and energy. Prices in that category rose 0.5 percent, accelerating from September’s 0.3 percent increase, and were up 5.2 percent over the past year.
Basic organic chemicals rose 3.9 percent. Prices also increased for navigational instruments, jet fuel and processed young chickens. Passenger car prices declined.
Food prices climbed 1.3 percent after rising 1.1 percent in September. Finished consumer foods increased 1.6 percent, adding to evidence of renewed monthly pressure on food costs.
Excluding food and energy, producer prices increased 0.3 percent, matching expectations, and were up 5 percent from a year earlier. September’s monthly increase in that measure was revised up to 0.8 percent from 0.7 percent.
A separate measure excluding food, energy and trade services rose 0.5 percent for a second consecutive month. It increased 4.9 percent over the past year.
Services prices rose 0.2 percent, their fifth consecutive monthly increase, and were up 5 percent from a year earlier. September’s services increase was revised up to 1 percent from 0.8 percent.
Transportation and warehousing prices jumped 2 percent in October. Truck freight prices rose 3.9 percent, accounting for more than 80 percent of the overall services increase.
Declining wholesale and retail margins helped restrain services inflation. Trade services margins fell 0.2 percent, including a 4.2 percent decline in machinery and vehicle wholesaling margins. Services prices excluding trade rose 0.4 percent.
Further back in the production process, processed goods prices rose 0.4 percent and were up 14.6 percent from a year earlier, the largest annual increase since July 2022. Processed materials excluding food and energy increased 0.9 percent.
Raw materials provided some relief. Unprocessed goods prices fell 3.1 percent, led by a 10.3 percent decline in crude petroleum. Prices for intermediate services nevertheless rose 0.6 percent, bringing their annual increase to 6.8 percent, the largest since November 2022.
The producer price index measures the prices paid to American businesses for goods and services. It includes sales to consumers, households, businesses, and foreign purchasers, a broader array of customers than is measured by the consumer price index. Although it is sometimes referred to as a “wholesale” price index, it is not an index of wholesale prices. The headline figures, which come from the index for final demand, are based on sales of products to end-users rather than those that contribute to the manufacture or provision of other goods and services. It excludes import prices, since those are not paid to U.S. producers, but includes export prices, which are excluded from CPI.
