Wholesale prices rose less than expected in October, but inflationary pressures persisted and the Federal Reserve is likely still on track to raise interest rates soon.
The producer price index, which measures the prices domestic producers get for their products before they reach the consumer, rose a seasonally adjusted 0.3% for the month, compared to the Dow Jones consensus forecast for a 0.4% increase, the Bureau of Labor Statistics reported Friday.
Excluding food and energy, the core PPI showed a gain of 0.3%, meeting expectations.
On an annual basis, the overall PPI accelerated by 6.5%, up 0.2 percentage points, which is the highest annual rate since November 2022.
The report comes just weeks before the Federal Reserve’s next policy meeting on December 8-9. Markets are fully pricing in a quarter-percentage-point increase in the central bank’s overnight policy rate, with a slight likelihood that the Federal Open Market Committee opts for a half-point hike.
Stock market futures added to gains after the release, while Treasury yields were mixed.
Earlier this week, the BLS reported that inflation at the checkout was higher than expected.
The overall consumer price index saw an increase of 0.4% in October while the core index increased by 0.3%, both 0.1 percentage points more than expected. Due to the government shutdown in October 2025, the BLS was unable to collect some data and refrained from publishing a 12-month inflation figure for the CPI.
However, the figures show that the Fed is still far from its 2% inflation target.
Additionally, policymakers are beginning to worry that inflation generated by the war in Iran and rising fuel prices, as well as tariffs imposed by President Donald Trump, will begin to ripple through the economy. The Fed generally considers these price pressures to be temporary, but the magnitude of inflation could indicate that inflation is becoming more entrenched.
“We’ve had signs of trouble for several months in a row,” Chicago Fed President Austan Goolsbee said Friday in an interview with CNBC. “If you look at the magnitude of inflation, it’s not just that we’re above target and have been for some time. It’s that in categories that aren’t driven by oil prices or tariffs, you still see stagnant progress and, in some cases, poor direction.”
Excluding food, energy and commercial services, the PPI saw an increase of 0.5% in October.
Prices of goods increased by 0.5% in October, more than 60% of which was driven by goods excluding food and energy, which actually saw a decline of 0.1%. On an annual basis, the goods index jumped 10.2%, the largest 12-month increase since October 2022.
Prices for final demand services increased by 0.2%, most of which was related to transportation and warehousing services, and within this category, a 3.9% increase in the transportation of goods by truck.
“We’ve been above 2% for almost six years, and while we sometimes make progress, lately we’re not making any progress and, if anything, it’s going in the wrong direction,” Goolsbee said. “Inflation is rising; it has proven to be much more persistent than we initially predicted because of supply shocks.”
Other elements of the PPI report also showed gains over several years. Prices of processed intermediate goods rose 14.6% compared to October 2025, the largest annual increase since July 2022. Intermediate prices of services showed an increase of 6.9%, the largest since November 2022.
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