Food helps push up producer price index
WASHINGTON — Prices at the wholesale level climbed 0.4 percent in October and 2.8 percent over the past year, biggest annual jump in more than five years and a sign that an improving economy may finally be reviving inflationary pressures.
The Labor Department says last month’s increase in the producer price index, which measures inflation pressures before they reach the consumer, matched the 0.4 percent rise in September. The uptick from October 2016 was the biggest since February 2012. The 12-month increase was driven by a 7.6 percent jump in energy prices.
But energy prices were unchanged from September to October. Food prices rose 0.5 percent in October, most since June. Excluding volatile food and energy sectors, wholesale prices rose 0.3 in October from September.
Producer prices rose faster than economists had expected in October. Since the Great Recession, inflation has come in consistently below the Federal Reserve’s 2 percent annual target. But many economists expect price pressures to rise as the economy improves. Economic growth has come in at or better than a healthy 3 percent annual rate in each of the last two quarters, and unemployment has fallen to 4.1 percent, the lowest level in almost 17 years.
On Wall Street Tuesday, energy companies led stocks modestly lower amid the biggest drop in crude oil prices since October.
“There’s this perception that there’s a lot of supply waiting in the wings, and as prices have moved higher, that’s made the marginal producer want to come out and just find more oil,” said Eric Freedman, chief investment officer of U.S. Bank Wealth Management.