US producer prices rose 0.3 percent in October, the Bureau of Labor Statistics reported on Friday, a smaller monthly increase than the 0.4 percent economists surveyed by Dow Jones had expected and a sharp cooling from September, whose monthly rise the release revised to 1.4 percent. On an unadjusted basis, final demand prices increased 6.5 percent over the 12 months ended in October, just under the 6.6 percent consensus and the largest 12 month rise since a 7.4 percent increase in November 2022.
Goods led the month. Final demand goods prices increased 0.5 percent, with more than 60 percent of that advance attributable to goods less foods and energy, which also moved up 0.5 percent. Food prices rose 1.3 percent, while energy prices edged down 0.1 percent, a reversal from September’s surge. Basic organic chemicals advanced 3.9 percent and jet fuel moved higher, while diesel fuel prices fell 7.9 percent and pork and passenger cars also declined. Over 12 months, final demand goods prices rose 10.2 percent, the largest increase since October 2022.
Services rose more slowly, up 0.2 percent, and more than 80 percent of that increase came from truck transportation of freight, which rose 3.9 percent; transportation and warehousing services overall rose 2.0 percent, while trade services margins decreased 0.2 percent and margins for machinery and vehicle wholesaling fell 4.2 percent. The index for final demand less foods, energy and trade services, the bureau’s underlying pipeline measure, rose 0.5 percent in October, the same as in September, and advanced 4.9 percent over the year.
The release is the last major inflation report before the Federal Open Market Committee meets on December 8 to 9. It follows Tuesday’s consumer price report, in which October consumer prices rose 0.4 percent with core up 0.3 percent, and it lands with futures markets pricing a December rate increase as close to certain after this week’s Treasury selloff. A softer headline alongside a firm underlying measure leaves that pricing logic intact: pipeline inflation is no longer accelerating the way it did in September, but at 6.5 percent on the year it is still running far above the pace the committee has said it wants.