Pro­ducer prices rise more than ex­pected

The Washington Post - - ECONOMY & BUSINESS -

U.S. pro­ducer prices rose more than ex­pected in Oc­to­ber, driven by a surge in the cost of ser­vices, lead­ing to the big­gest an­nual in­crease in whole­sale in­fla­tion in more than 51/ years.

2 Tues­day’s re­port from the La­bor Depart­ment also showed steady gains in un­der­ly­ing pro­ducer prices, which sup­ported ex­pec­ta­tions of a grad­ual in­crease in in­fla­tion and keep the Fed­eral Re­serve on track to raise in­ter­est rates in De­cem­ber.

The pro­ducer price in­dex for fi­nal de­mand in­creased 0.4 per­cent last month af­ter a sim­i­lar gain in Septem­ber. That lifted the year-on-year in­crease in the PPI to 2.8 per­cent, the largest rise since Fe­bru­ary 2012, from 2.6 per­cent in Septem­ber.

Econ­o­mists had fore­cast the PPI edg­ing up 0.1 per­cent last month and in­creas­ing 2.4 per­cent from a year ago. Last month’s rise in prices re­ceived by the na­tion’s farms, fac­to­ries and re­finer­ies re­flected a 0.5 per­cent surge in the cost of ser­vices, mostly mar­gins re­ceived by whole­salers and re­tail­ers.

Out­side of ser­vices, pro­ducer price in­creases were fairly broad last month.

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