(Bloomberg) -- US producer prices picked up in October, fueled in part by gains in portfolio management costs and other categories that feed into the Federal Reserve’s preferred inflation gauge.
The producer price index for final demand increased 0.2% from a month earlier after rising a revised 0.1% in September, Bureau of Labor Statistics data showed Thursday. Compared with a year ago, the PPI rose 2.4%.
A measure of producer prices excluding volatile food and energy categories climbed 0.3% and 3.1% from a year ago.
The wholesale inflation data follow 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 a lack of headway more recently and the threat of higher tariffs in the incoming Trump administration have added to uncertainty about the path of inflation and interest rates.
“We should expect a bit more volatility in producer prices, especially as businesses manage supply chains amid the risk of tariffs,” Jeffrey Roach, chief economist for LPL Financial, said in a note.
A separate report Thursday showed applications for US unemployment benefits fell to the lowest level since May last week, signaling there is still a healthy demand for workers after recent storms and strikes.
US Treasury yields were down and the dollar was little changed as investors trimmed the odds of a Fed rate cut in December. The S&P 500 index opened higher.
Economists parse the PPI data for categories that feed into the Fed’s preferred inflation measure — the personal consumption expenditures price index. One of those is portfolio management fees, which track the stock market. They climbed 3.6%, the most in six months.
After the report, some economists nudged up to 0.3% their forecasts for core PCE inflation — a level suggesting an annual rate that’s well above the Fed’s 2% target. That report is due out Nov. 27.
Fed Chair Jerome Powell is scheduled to speak later Thursday about the economic outlook.
In the report, airfares were also higher, increasing by the most since the end of 2022. Health care categories were mostly stronger, the report showed.
Overall services costs increased 0.3%, after a 0.2% gain in the prior month. The gain also reflected a pickup in machinery and vehicle wholesaling margins, along with cable and satellite subscriber services.
Prices of goods, excluding food and energy, were also 0.3% higher in a slight pickup from the prior month. The BLS said an 8.4% jump in the cost of carbon steel scrap was a “major factor.”
Tempering the overall gain in PPI were declines in wholesale food and energy prices.
--With assistance from Molly Smith and Matthew Boesler.
(Adds PCE price index estimates)
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