US Producer Price Inflation Rises 6.5% Annually Despite Slower Monthly Increase
Key Facts
The US Producer Price Index for final demand rose 0.3% in October from the previous month and increased 6.5% in the 12 months ended in October, according to the Bureau of Labor Statistics. The annual increase was the largest since November 2022, according to the Associated Press, putting price pressures at earlier stages of production back in focus for inflation watchers. The monthly reading was far slower than September’s 1.4% increase, highlighting the contrast between a slowdown month over month and an acceleration in the annual rate. October’s monthly reading was 0.3% versus a forecast of 0.4%, while the previously reported reading was 1.4%, according to EL7 data. The annual figure reflects the price trend over a full year, while the monthly reading measures what happened to producer prices in October alone.
The core index, which excludes food and energy, rose 0.3% between September and October and 5% year over year, according to the Associated Press. The core index’s monthly increase matched the overall final-demand reading, but its 12-month rate remained at 5%, indicating broad price increases even after two volatile components are excluded. Among final-demand components, goods prices rose 0.5% during the month, while services prices increased 0.2%, according to the Bureau of Labor Statistics. The bureau said more than 80% of the increase in final services prices was tied to higher prices for truck freight transportation, which rose 3.9% in October. These components put transportation at the center of the month’s services-price move, alongside the increase in final goods prices.
The Associated Press reported that wholesale food prices rose 1.3% in October, alongside a 3.9% jump in truck freight transportation prices. The agency said the slowdown in wholesale inflation was linked to overall energy prices holding steady, while food and transportation costs climbed as the effects of elevated fuel prices spread to other parts of the economy. It also said spending on AI data centers is raising a range of costs. These factors combine pressures from transportation and food costs with spending tied to AI infrastructure, as the monthly increase in the final-demand index slowed from September. For goods used at earlier stages of production, the index for processed intermediate goods rose 14.6% in the 12 months ended in October, its largest increase since July 2022, according to the Bureau of Labor Statistics.
October consumer price data offer a parallel reading of price trends at the household level: the Consumer Price Index rose 0.4% during the month, after a 0.6% increase in September, according to the Bureau of Labor Statistics. The core Consumer Price Index, which excludes food and energy, also rose 0.3% in October. In the latest household spending data available before October’s reading, the core personal consumption expenditures price index rose 0.3% monthly and 3.1% annually in September, according to the Bureau of Economic Analysis. The October personal income and spending report, which includes the personal consumption expenditures price index, is scheduled for release on November 25 at 8:30 a.m. Eastern time. That puts the awaited October personal consumption expenditures price data after September’s core reading of 3.1% annually.
In the stock market on November 13, the Nasdaq Composite fell 1.2% at 12:36 p.m. Eastern time, and Nvidia shares declined 3%, according to the Associated Press. The report said AI stocks were under pressure and also cited Nvidia’s chairman’s resignation among factors influencing market moves. The moves came amid stock-market volatility, with the report not attributing the Nasdaq’s decline solely to producer price data. By contrast, the S&P 500 was on track for a weekly gain of 2.2%, its first weekly gain since early October and its largest since August, according to the report. These figures reflect the differing moves in indexes and stocks during the session and week covered by the report.
After the October data, attention turns to new dates on the data and monetary-policy calendar. Federal Reserve Chair Kevin Warsh is scheduled to deliver a speech on November 16 at 12:00 p.m., according to the Federal Reserve calendar. The board has also set November 18 as the release date for the minutes of the Federal Open Market Committee meeting held on October 27 and 28. On inflation, November producer price data are due on December 15 at 8:30 a.m. Eastern time, according to the Bureau of Labor Statistics schedule. These dates give investors the opportunity to hear from the board’s chair and review the meeting minutes, then follow the next Producer Price Index reading.