Wholesale prices in the United States rose last month, although remaining low but showing that the American economy has not yet fully overcome inflationary pressures.
Thursday's report from the Labor Department showed that its producer price index, which tracks inflation before it reaches consumers, rose 0.2% from September to October, up from a 0.1% increase the previous month. Compared to the previous year, wholesale prices rose 2.4%, up from a 1.9% year-on-year increase in September. The increase in the price of services drove the increase this October.
Excluding food and energy prices, which tend to go up and down each month, core wholesale prices rose 0.3% from September and 3.1% from a year earlier. This reading is as expected by economists.
The October report on producer prices comes a day after the Labor Department reported that consumer prices rose 2.6% last month from a year earlier, a sign that consumer-level inflation may be starting to stabilize after falling in September to the slowest level since 2021. Even so, most economists say they believe inflation will continue to decline.
Inflation is now moving towards the Federal Reserve's 2% year-on-year target, and central bank policymakers are so pleased with this development that they have cut their benchmark interest rate twice since September, a change in policy after they raised rates 11 times in 2022 and 2023.
The producer price index released on Thursday could provide an early indication of the direction of consumer inflation. Economists also monitor the components of this index, particularly health and financial services, which also influence the personal consumption expenditures (PCE) index, the Federal Reserve's preferred measure of inflation.
