Producer price growth accelerated in October sequentially as wholesale costs of goods rebounded, the Bureau of Labor Statistics reported Thursday. The US producer price index increased 0.2% last month on a seasonally adjusted basis, meeting the Bloomberg-polled consensus estimate. The latest reading followed a revised 0.1% rise in September. The index for final demand goods turned positive at 0.1% in October, compared with a 0.2% decrease the month before.
Services growth accelerated to 0.3% from 0.2% on a monthly basis. Within goods, energy costs edged down 0.3% last month following a 2.8% drop in September while food fell 0.2% following an increase of 1%. The headline index minus food, energy, and trade services gained 0.3% higher in October, topping analysts' estimate for a 0.2% increase. "A large rise in portfolio management services helped drive the stronger gain in core prices last month," Oxford Economics Senior US Economist Matthew Martin said in emailed remarks to MT Newswires.
"Declines in energy and food prices offset some of the gains elsewhere." On an annual basis, producer prices were up 2.4% last month, ahead of the 2.3% pace that analysts were projecting. The services measure jumped 3.5%, while goods' costs inched 0.2% higher year-over-year. The final demand energy index fell 8.6% from October 2023. On Wednesday, the BLS reported that consumer inflation increased in line with market estimates last month on both sequential and annual bases, boosting bets that the Federal Reserve will again cut interest rates by a quarter percentage point in December.
The Fed's monetary policy setting committee lowered interest rates by 25 basis points last week, following a 50-basis-point cut in September. "The details from the (consumer price index) and PPI reports this week signal that prices rose at a faster pace in October, but the details don't point to accelerating inflation," according to Martin.
"Our tracking estimate for the personal consumption expenditure deflator indicates that the headline PCE deflator rose by 0.23% and the core PCE deflator increased by 0.27%, essentially matching the rise in the CPI and leaving the door open for a rate cut in December.".