U.S. Producer Price Inflation Hits 6.5% Annually, Highest Since November 2022
Key Facts
The U.S. producer price index for final demand rose 0.3% in October on a seasonally adjusted monthly basis, while increasing 6.5% in the 12 months ended in October, according to the U.S. Bureau of Labor Statistics. The annual reading was the largest increase since November 2022, when the index rose 7.4%. The monthly reading was below market expectations of 0.4%, but came alongside an acceleration in the annual rate from 6.3% in September. By contrast, the monthly pace eased from 1.4% in September, after reaching 0.4% in August. The data thus present a mixed picture of price pressures at the producer level: a strong annual increase alongside a slower monthly pace.
October's increase came from both goods and services prices, with prices for final-demand goods rising 0.5% during the month and services prices increasing 0.2%, according to the Bureau of Labor Statistics. Within goods, food prices rose 1.3%, while energy prices fell 0.1%. This divergence shows that the increase in the goods index was not accompanied by a rise in its energy component during the month, while food recorded a larger increase than goods overall. In the 12 months ended in October, prices for final-demand goods rose 10.2%. That was the largest annual increase since October 2022, when the rise was 10.5%.
Transportation and warehousing services were among the main sources of the rise in services prices, with the Bureau of Labor Statistics attributing three-quarters of October's increase in the final-demand services index to a 2.0% rise in prices in that sector. Within transportation and warehousing, truck freight transportation accounted for more than 80% of the increase in the final-demand services index, after its prices rose 3.9% during the month. These figures tie most of the services pressure to the cost of moving goods, rather than to an evenly distributed increase across the index's components. At the same time, the overall index excluding food, energy and trade services rose 0.5% in October, the same monthly rate recorded in September. This measure increased 4.9% in the 12 months ended in October, according to official data.
Price pressures extended to earlier stages of the production chain, with processed intermediate goods prices rising 14.6% in the 12 months ended in October. The Bureau of Labor Statistics said this was the largest annual increase for the measure since July 2022, when the rise was 17.2%. This reading comes alongside a 10.2% year-over-year increase in final-demand goods prices, with the two indexes remaining distinct measures of different stages of demand. In the consumer price index, prices for all urban consumers rose 0.4% in October on a seasonally adjusted monthly basis, following a 0.6% increase in September. This places the producer price reading in the context of consumer figures for the same month, without changing the difference between the two indexes or their comparison periods.
Attention is turning to the Federal Open Market Committee meeting scheduled for December 8 and 9, with the monetary policy decision due on the second day, according to the Federal Reserve's calendar. Before then, the November producer price report is scheduled for release on December 15, 2026, at 8:30 a.m. Eastern time, according to the Bureau of Labor Statistics. The next report will be a subsequent reading after the December meeting, while the current October data show a slowdown in the monthly rate to 0.3% and an acceleration in the annual rate to 6.5%.