U.S. Producer Prices Rose 0.3% in October, Below Forecasts, With Annual Rate at 6.5%
The U.S. Bureau of Labor Statistics said Nov. 13 that the Producer Price Index for final demand rose 0.3% in October from the previous month, below the 0.4% increase economists surveyed by Dow Jones had expected. The year-over-year increase was 6.5%, also short of the 6.6% forecast. Prices for goods rose 0.5% and prices for services rose 0.2%.
The Producer Price Index measures the prices businesses receive for their goods and services, showing how much prices are rising at the production stage before consumers buy the goods. The month-over-month figures are adjusted for seasonal factors, while the year-over-year figures compare with the same month a year earlier.
The pace of increase slowed markedly from September, when the index jumped 1.3%, the largest monthly gain since March 2022. Energy prices, which rose 10.8% in September, and gasoline prices, which rose 20.3%, drove much of that increase. In October, falling crude oil prices eased the upward pressure from energy. West Texas Intermediate crude fell 10.9% between the survey dates for the index.
Even though the monthly gain shrank, the annual rate rose from 6.3% in September to 6.5% in October. That was because the October 2025 increase was only 0.2%, leaving a low base for comparison. The annual rate of 6.5% is the highest since November 2022.
Core producer prices, which exclude food and energy, rose 0.3% in October, matching forecasts, and were up 5.0% from a year earlier. An index that also excludes trade services, the margins earned by distributors, rose 0.5% from the previous month and 4.9% from a year earlier.
The picture looks different from consumer prices. The Consumer Price Index for October, released Nov. 10, rose 0.4% from the previous month, above the 0.3% forecast, and core consumer prices also rose 0.3%, above the 0.2% forecast. The consumer price release carried no year-over-year figures because the October 2025 federal government shutdown meant no price surveys were conducted then.
Producer prices feed directly into Federal Reserve decisions. Items in the producer price data such as airfares, asset management fees and physicians’ services are carried directly into the personal consumption expenditures price index, the measure the Fed watches most closely. The October personal consumption expenditures index will be released Nov. 25.
The Federal Open Market Committee, led by Federal Reserve Chair Kevin Warsh, will decide interest rates at its Dec. 8 and 9 meeting. Before the release, futures markets were pricing in about a 90% chance of a 0.25 percentage point increase in December. The question was whether the increase would be 0.25 or 0.5 percentage points, and the softer-than-expected reading did nothing to support the case for 0.5 points.
The October producer price report is the last one before the December meeting. The November index will be released Dec. 15, after the meeting. The October figures are preliminary and subject to revision.
