- Producer prices rise 0.6% in October
- PPI increases 8.6% year on year
- The core PPI increases by 0.4%; gains 6.2% over one year
WASHINGTON, Nov. 9 (Reuters) – Producer prices in the United States rose sharply in October, on the back of soaring gasoline and motor vehicle retail costs, suggesting that a High inflation could persist for some time against a backdrop of strained supply chains linked to the pandemic.
The producer price index for final demand rose 0.6% last month after climbing 0.5% in September, the Labor Department said on Tuesday. In the 12 months to October, the PPI rose 8.6% after a similar gain in September.
Economists polled by Reuters expected the PPI to grow 0.6% on a monthly basis and 8.7% year on year.
“The acceleration of inflation in the United States may not subside as quickly as previously thought, especially for businesses due to global supply chain issues,” said Ryan Sweet, Senior Economist at Moody’s Analytics in West Chester, PA.
“High inflation puts the pressure on the Federal Reserve, but it has not shown signs of easing as it will support higher inflation to quickly bring the labor market back to full employment.”
More than 60% of the increase in the PPI last month was due to a 1.2% rise in goods prices, which followed a 1.3% jump in September. A 6.7% surge in gasoline prices explains a third of the rise in goods prices. The prices of diesel, gasoline and jet fuel as well as plastic resins have increased.
Wholesale food prices fell 0.1% while the cost of beef and veal fell 10.3%. Prices for light trucks fell when the government introduced new model year passenger cars and light trucks in the PPI.
Services gained 0.2% last month after a similar increase in September. An 8.9% jump in automotive and parts retail margins explains more than 80% of the increase in services. The cost of transportation and warehousing services jumped 1.7%.
There have also been increases in wholesale prices for clothing, footwear, freight trucking, food and alcohol retailing, ambulatory care in hospitals as well as machinery, parts. equipment and supplies. But portfolio management fees have come down.
Excluding the volatile components of food, energy and commercial services, producer prices rose 0.4%. The core PPI gained 0.1% in September. In the 12 months to October, core PPI increased 6.2%. This followed a 5.9% gain in September.
Reporting by Lucia Mutikani, edited by Louise Heavens and Andrea Ricci
Our standards: Thomson Reuters Trust Principles.