US producer prices rose 0.3% in October, marking the largest annual gain since November 2022. The Labor Department said the 6.5% yearly increase followed a 1.4% surge in September. Higher costs for food and chemicals pushed these figures up, fueling expectations that the Federal Reserve could continue raising interest rates.
WASHINGTON, Nov 13 (Reuters) - US producer prices increased further 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 Producer Price Index for final demand rose 0.3% last month after an upwardly revised 1.4% surge in September, the Labor Department's Bureau of Labor Statistics said on Friday. Economists polled by Reuters had forecast the PPI climbing 0.4% after vaulting 1.3% in September.
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Producer prices last month were lifted by a 0.5% rise in goods, mostly food and basic organic chemicals. Services increased 0.2%, advancing for the fifth straight month.
The PPI shot up 6.5% year-over-year in October, the largest annual gain since November 2022, after advancing 6.3% in September.
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% from 4.2% 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%-4.00% range last month.