US producer prices post biggest annual gain in four years
US producer prices rose 6.5 per cent year-on-year in October, the largest annual increase since November 2022, though slightly below market expectations. The data supports expectations that the Federal Reserve may continue raising interest rates after next month's widely expected hike.
US producer prices shot up 6.5 per cent year-on-year in October, leading to the largest annual gain in four years and supporting expectations that the Federal Reserve could continue raising interest rates after next month's widely expected hike, the Labor Department's Bureau of Labor Statistics said on Friday.
However, the rise was lower than market expectations of 6.6 per cent. The increase is the largest annual gain since November 2022, after advancing 6.3 per cent in September.
The Producer Price Index for final demand rose 0.3 per cent last month, versus a market expectation of 0.4 per cent, after an upwardly revised 1.4 per cent surge in September. Economists polled by Reuters had forecast the PPI climbing 0.4 per cent after vaulting 1.3 per cent in September.
Producer prices last month were lifted by a 0.5 per cent rise in goods, mostly food and basic organic chemicals. Services increased 0.2 per cent, advancing for the fifth straight month.
The report followed news this week of a stronger-than-expected increase in consumer prices in October. Nonfarm payrolls surged in October and the unemployment rate dropped to 4.1 per cent from 4.2 per cent in September, the government reported last week.
That, together with comments from US central bank Governor Christopher Waller, have left financial markets wavering between pricing in a 25-basis-point rate hike in December and leaving room for half-a-percentage-point increase. Financial markets anticipated another increase in borrowing costs in January, CME's FedWatch tool showed. The Fed left its benchmark overnight interest rate in the 3.75 per cent-4.00 per cent range last month.