US producer prices shot up 6.5 percent year-on-year 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.
However, the rise is lower than market expectations of 6.6 percent. The increase is the largest annual gain since November 2022, after advancing 6.3 percent in September.
The Producer Price Index for final demand rose 0.3 percent last month, versus a market expectation of 0.4 percent, after an upwardly revised 1.4 percent 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 percent after vaulting 1.3 percent in September.
Producer prices last month were lifted by a 0.5 percent rise in goods, mostly food and basic organic chemicals. Services increased 0.2 percent, advancing for the fifth straight month.
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 percent from 4.2 percent 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 percent-4.00 percent range last month.
Reuters and staff reporter
