US producer prices are up 6.5% in a year, the most since 2022

What happened

US producer prices for final demand, what businesses receive for goods and services they sell, rose 0.3% in October, the Bureau of Labor Statistics said on 13 November. Economists had expected 0.4%. September's jump was revised up to 1.4%. Over twelve months, producer prices rose 6.5%, the largest increase since November 2022, when the rate was 7.4%.

Core prices, which exclude food, energy and the margins of traders and retailers, rose 0.5%, the same as in September and above the 0.3% forecast. They were 4.9% higher than a year earlier.

What moved

• Goods rose 0.5%, and 10.2% on the year, the largest annual rise since October 2022. Food rose 1.3% and basic organic chemicals 3.9%. Energy edged down 0.1%, after a 10.8% jump in September; diesel fell 7.9%.
• Services rose 0.2%, the fifth monthly increase in a row. Transport and warehousing rose 2.0%, and truck freight 3.9%: fuel costs passing through to shipping.

Why producer prices matter

Producer prices measure costs earlier in the chain. When a food processor, a chemicals maker or a trucking firm pays more, part of that usually reaches consumers months later. October's figures show the oil shock spreading from fuel into food, materials and transport, the second-round effects central banks fear (see our oil shocks mechanic). Consumer prices showed the same pattern earlier this week (our story).

For the Fed, which meets on 8–9 December, it is one more reason to raise rates. Governor Michelle Bowman said this week that "inflation pressures have persisted for longer than I had hoped". See what markets are pricing.

Where it sits in the chain

This is Link 1, inflation, fed by Link 4, energy: higher fuel costs have moved into food, chemicals and freight, which feed consumer prices next.

What to watch

• The PCE price index for October, the Fed's preferred inflation measure.
• The November jobs report before the Fed's December meeting.