US Wholesale Prices Climb 6.5%, Fastest Since 2022

US wholesale prices rose 6.5% in October from a year earlier, the fastest annual pace since 2022, Bloomberg News reported, citing Bureau of Labor Statistics data released on Friday. The producer price index for final demand climbed 0.3% from September.

ABC News said both the monthly and annual readings came in slightly below economists’ expectations. Yahoo Finance reported that forecasters had expected an annual gain of 6.6%, and described the increase as the largest since the post-pandemic surge, when prices rose 7.4% in 2022.

Goods drive the gain

According to the BLS figures cited by Bloomberg, goods prices advanced 0.5% in October while services rose 0.2%. Excluding food and energy, producer prices were up 0.3% on the month and 5% from a year ago. A narrower gauge that also strips out trade services rose 0.5% on the month and 4.9% over the year, compared with 5% in September, Yahoo Finance said.

Wholesale energy prices eased 0.1% after surging the previous month, while food prices jumped 1.3%, the biggest monthly rise since February, Bloomberg reported. ABC News said energy had risen 10% in September. Yahoo Finance noted that more than 60% of the increase in physical goods prices came from manufactured products rather than food or energy.

Transportation and warehousing costs rose 2% in October, according to Bloomberg, with truck freight prices posting their largest gain since April and standing nearly 25% higher than a year ago. ABC News cited AAA data showing diesel at $6.06 a gallon, about 61% above a year earlier.

Carl Weinberg, chief economist at High Frequency Economics, said in a note that the data “will keep inflation risks front and center,” adding that transport costs are how energy prices feed into core goods prices, Bloomberg reported.

Pressure on the Fed

The figures follow a consumer price index report showing a 0.4% rise in October, above the 0.3% economists expected, ABC News said. Odds of a quarter-point Federal Reserve rate hike at its next meeting stood at about 89%, according to the CME Group’s FedWatch tool, and ABC noted it would be the second hike in four months.

New York Fed President John Williams said on Thursday that inflation is “far too high,” Yahoo Finance reported, while Fed Governor Michelle Bowman said earlier in the week that price pressures had persisted and shown signs of broadening.

Jeffrey Roach, chief economist at LPL Financial, told Yahoo Finance he expects a 25-basis-point hike, warning that a larger 50-basis-point move could pose unnecessary risks given the fragility of the economy. Thomas Ryan of Capital Economics said consecutive hikes in December and January looked like the most likely path.

What’s next

The Fed is widely expected to raise rates by 0.25 percentage points at the end of its two-day meeting on December 9, Bloomberg reported. Before then, the Bureau of Economic Analysis will publish October data on personal consumption expenditure prices, income and spending on November 25.

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