US producer prices unexpectedly rose in October, but the underlying trend continued to point to a benign inflation environment that could bolster the Federal Reserve’s resolve to keep interest rates very low a bit longer.
The US Labour Department said November 18 that its producer price index increased 0.2 per cent, driven by a jump in prices for services, after slipping 0.1 per cent in September. However, the so-called core PPI, which excludes food, energy and trade services, edged up only 0.1 per cent after dipping 0.1 per cent in the prior month.
October saw the annual introduction of prices for new motor vehicle models, which can cause volatility in the series.
US Producer Price Index
In the 12 months through October, US producer prices increased 1.5 per cent, the smallest advance since February, said the US Labour Department November 18. The core PPI, which covers about two-thirds of final demand, increased 1.6 per cent.
Last month, prices for services rose 0.5 per cent, the largest gain since July, 2013. That was largely due to an increase in margins at wholesalers and retailers, which some economists said reflected an effort by producers to take advantage of the extra cash a drop in energy prices has left in consumers’ wallets.
Energy prices fell 3.0 per cent in October, the fourth successive monthly decline.
Wholesale passenger car prices recorded their biggest gain in five years, while food prices increased for the first time in two months.