U.S. producer inflation came in below expectations last month, suggesting price pressures may be moderating.
The producer price index—a monthly measure of the change in the prices received by U.S. companies—rose 0.3 percent in October, according to Bureau of Labor Statistics data released on Nov. 13.
This was a sharp deceleration from the upwardly revised 1.4 percent increase in September, reflecting easing energy price pressures.
October’s reading also came in below the consensus forecast of 0.4 percent.
On a 12-month basis, headline wholesale inflation edged up to a lower-than-expected 6.5 percent, the highest since November 2022.
The index is considered a precursor to future consumer inflation.
Goods excluding food and energy accounted for more than 60 percent of the overall goods price increase, the bureau said.
Final demand services rose 0.2 percent, driven by transportation and warehousing services.
Stripping out the volatile energy and food categories, core producer inflation climbed 0.3 percent, from an upwardly adjusted 0.8 percent gain in September.
This was in line with the market forecast.
The annual core producer inflation was unchanged at 5 percent.
Producer inflation excluding food, energy, and trade services rose 0.5 percent in October, matching September’s increase, and was up 4.9 percent over 12 months.
“This morning’s Producer Price Index (PPI) data came in mixed and, although the monthly numbers seem to be coming down, the year-over-year numbers are higher now than last year,” Chris Zaccarelli, chief investment officer at Northlight Asset Management, told The Epoch Times in an emailed note.
U.S. stocks welcomed the lighter monthly headline producer inflation data, with the leading benchmark averages firmly in the green at the end of the trading week.
Yields on Treasury bonds were mixed. The benchmark 10-year firmed above 5.1 percent, and the 30-year inched closer to 5.5 percent. The 2-year, which tracks monetary policy expectations, was little changed at around 4.87 percent.
But Heather Long, chief economist at Navy Federal Credit Union, called it a “worrying U.S. inflation statistic.”
“Businesses are almost certainly going to pass some of those higher costs onto consumers. It’s yet another worrisome inflation risk heading into 2027,” Long said in an X post.
‘Borderline Disturbing’
Earlier this week, the federal agency released the October consumer price index (CPI) report. Monthly headline consumer inflation rose to a higher-than-expected 0.4 percent. Core inflation ticked up 0.3 percent, also above economists’ expectations.
While shelter was a large factor in the increase, it elicited a strong response from Chicago Federal Reserve President Austan Goolsbee, who called it “borderline disturbing” and “distressing.”
“We have got a real inflation issue on our hands that has been developing, and we’re going to have to deal with that,” Goolsbee said in an interview with PBS’ “NewsHour” on Nov. 10.
Hours before the October CPI release, Fed Governor Christopher Waller suggested he and his colleagues may have to consider a super-sized interest rate hike next month.
“I believe a 50 basis point hike in the policy rate should be considered at the December meeting. Hiking only 25 basis points would put our credibility at risk, a risk I am not eager to take,” Waller said in an overseas speech.
In addition to war-driven supply constraints, recent data suggest demand could be contributing to some inflation pressures, says Jeffrey Roach, chief economist at LPL Financial.
Roach cited higher airline fares that have yet to slow the demand for flying. Restaurant food prices also surged last month, he said, a “sign that inflation is partly being driven by strong consumer demand for eating out.”
A trader looks on as Federal Reserve Chair Kevin Warsh is displayed on a television screen on the floor of the New York Stock Exchange on Sept. 16, 2026. (Timothy A. Clary/AFP via Getty Images)
Futures markets overwhelmingly expect a quarter-point rate hike at the December Federal Open Market Committee policy meeting, according to the CME FedWatch Tool.
The Fed will hold its next meeting on Dec. 8 and 9.
