In October, the U.S. Producer Price Index (PPI) increased by 0.2%, surpassing the revised 0.1% gain from September, as reported by the U.S. Bureau of Labor Statistics. Economists had anticipated a 0.2% rise. Compared to the previous year, the PPI grew by 2.4%. When excluding volatile categories like food and energy, the core PPI rose by 0.3% month-over-month and 3.1% year-over-year.
The recent Consumer Price Index (CPI) release indicated persistent core inflation for the third consecutive month. This suggests that while overall price pressures have eased this year, recent stagnation coupled with tariff threats could increase inflation and interest rate uncertainties.
Jeffrey Roach, Chief Economist at LPL Financial, noted that PPI volatility is expected, particularly due to tariff impacts on business supply chains.
Additionally, another report highlighted a reduction in initial unemployment claims to their lowest since May, reflecting robust labor demand despite recent disruptions from storms and strikes.
Economists view PPI data to analyze components preferred by the Federal Reserve for inflation measures, such as the Personal Consumption Expenditures (PCE) Price Index. Investment portfolio management fees, tracking stock market changes, rose by 3.6%, marking the largest jump in six months. Post-report, some economists increased their core PCE growth forecast to 0.3%, suggesting an annual rise exceeding the Fed's 2% target. The PCE report is due on November 27.
Key figures included a 0.2% monthly increase in PPI and a 0.3% rise in core PPI, aligning closely with estimates. Airfare prices surged, reaching their highest since late 2022, while healthcare categories largely strengthened. Service costs rose by 0.3%, up from 0.2% in the prior month. Excluding food and energy, goods prices increased by 0.3%, with carbon steel scrap costs rising by 8.4%, identified as a significant factor.
J. Powell is expected to deliver a speech on the economic outlook, adding to the day's critical economic discussions.
