US producer prices rise further in October

US producer prices increased further ​in October, leading to the ​largest annual gain in ‌four years ​and supporting expectations that the Federal Reserve could continue raising interest rates after next month's widely ‌expected hike. The Producer Price Index for final demand rose 0.3% last month after an upwardly revised 1.4% surge in September, the Labor Department's Bureau of ‌Labor Statistics said on Friday. Economists polled by Reuters had forecast ‌the PPI climbing 0.4% after vaulting 1.3% in September.

Producer prices last month were lifted by a 0.5% rise in goods, mostly food and basic organic chemicals. Services increased ⁠0.2%, advancing ​for the ⁠fifth straight month. The PPI shot up 6.5% year-over-year in October, the largest annual gain ⁠since November 2022, after advancing 6.3% in September.

The report followed news this week ​of a stronger-than-expected increase in consumer prices in October. Nonfarm payrolls surged in ⁠October and the unemployment rate dropped to 4.1% from 4.2% in September, the government ⁠reported last ​week. That, together with comments from US central bank Governor Christopher Waller, have left financial markets wavering between pricing in a 25-basis-point ⁠rate hike in December and leaving room for half-a-percentage-point increase. Financial markets anticipated another ⁠increase in ⁠borrowing costs in January, CME's FedWatch tool showed. The Fed left its benchmark overnight interest rate in the 3.75%-4.00% ‌range ‌last month.