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WRAPUP 1-Energy, services fuel jump in U.S. producer prices

Updated: 09-11-2018 19:49 IST
U.S. producer prices rose more than expected in October and at their fastest pace in six years but measures of underlying price pressure cooled, bolstering the view that the U.S. central bank is not facing a resurgence in inflation.

Prices paid by producers rose 0.6 percent in October, the biggest gain since September 2012, with much of the increase fueled by a jump in costs for energy and trade services, according to figures published on Friday by the U.S. Labor Department.

Analysts polled by Reuters had expected producer prices to rise 0.2 percent from September.

But for a core measure of producer price pressures, cost gains slowed, the data showed. Producer prices outside food, energy and trade services rose 0.2 percent in October, down from a 0.4 percent gain in September. Compared to a year earlier, these core prices were up 2.8 percent, compared to 2.9 percent in the 12 months through September.

Yields on U.S. government debt inched higher following the publication of the data, trimming earlier declines. The U.S. Federal Reserve left interest rates unchanged on Thursday and said it remained on track to continue raising borrowing costs gradually. It is widely expected to raise rates in December.

The Fed has been slowly hiking interest rates since 2015 to keep inflation under control. The central bank seeks to keep prices for consumers rising 2 percent annually and monitors producer prices for signs that inflationary prices might be building.

In October, those inflationary pressures appeared strongest in relatively volatile goods and services. Producer prices for trade services, which include costs for retailing and wholesaling merchandise, rose 1.6 percent, the biggest gain since October 2014. Costs surged 2.7 percent for energy, the fastest increase in five months.

Excluding only food and energy, prices rose 0.5 percent in October after gaining 0.2 percent in September. Economists had forecast a 0.2 percent rise. (Reporting by Jason Lange; Editing by Andrea Ricci)

(This story has not been edited by Devdiscourse staff and is auto-generated from a syndicated feed.)