(Bloomberg) — U.S. producer prices rose in October, fueled in part by increases in portfolio management costs and other categories that feed into the Federal Reserve’s preferred inflation gauge.
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The producer price index for final demand rose 0.2% from a month earlier, following a revised 0.1% increase in September, data from the Bureau of Labor Statistics showed Thursday. Compared to a year ago, the PPI increased by 2.4%.
A measure of producer prices excluding volatile food and energy categories rose 0.3% and 3.1% from a year ago.
The wholesale inflation data follows the more closely watched Consumer Price Index, which showed on Wednesday that underlying inflation remained stubborn for a third month. Price pressures have largely abated this year, but recent lack of progress and the threat of higher rates in the incoming Trump administration have increased uncertainty about the path of inflation and interest rates.
“We should expect some more volatility in producer prices, especially as companies manage their supply chains amid the risk of tariffs,” Jeffrey Roach, chief economist at LPL Financial, said in a note.
A separate report on Thursday showed that claims for US unemployment benefits fell to the lowest level since May last week, indicating that there is still healthy demand for workers after the recent storms and strikes.
U.S. Treasury yields fell and the dollar was little changed as investors reduced the chances of a Fed rate cut in December. The S&P 500 index opened higher.
Economists analyze the PPI data for categories that contribute to the Fed’s preferred inflation measure: the personal consumption expenditures price index. One of these is portfolio management fees, which track the stock market. They rose 3.6%, the highest in six months.
Following the report, some economists revised their forecasts for core PCE inflation upward to 0.3% – a level that suggests an annual rate well above the Fed’s 2% target. That report will be published on November 27.
Fed Chairman Jerome Powell will speak about the economic outlook later Thursday.
Airfares were also higher in the report, with the largest increase since late 2022. Healthcare categories tended to be stronger, the report found.
Total service costs increased by 0.3%, following an increase of 0.2% in the previous month. The gains also reflected an increase in margins in wholesale machinery and vehicles, along with cable and satellite subscriber services.
