US producer prices rose again in October, posting their largest annual increase in four years and strengthening the case for the Federal Reserve to keep raising interest rates.
The producer price index for final demand climbed 0.3% last month, after an upwardly revised 1.4% surge in September, the Bureau of Labor Statistics said on Friday. Economists polled by Reuters had expected a 0.4% rise.
Over the 12 months to October, producer prices were up 6.5%, the biggest annual gain since November 2022, when the index rose 7.4% from a year earlier. The annual rate had stood at 6.3% in September.
Goods prices drove the monthly increase, rising 0.5%, with food and basic organic chemicals accounting for much of the gain. Services prices rose 0.2%, advancing for a fifth consecutive month.
The figures follow a stronger-than-expected rise in consumer prices earlier in the week and add to a run of data pointing to stubborn inflation. October’s consumer prices rose 0.4% on the month, against a forecast of 0.3%, while employers added jobs at a brisk pace and the unemployment rate fell to 4.1% from 4.2% in September.
Together, the data have left financial markets wavering over the size of the Fed’s next move. Traders have fully priced in a quarter-point increase at the central bank’s December 8-9 meeting, but comments from Fed Governor Christopher Waller this week have kept open the possibility of a half-point rise. Markets also expect a further increase in January, according to CME’s FedWatch tool.
New York Fed President John Williams told Reuters on Thursday that more rate rises are likely, saying inflation remains persistent. The Fed left its benchmark overnight rate in the 3.75% to 4.00% range last month after a quarter-point increase in September.
Friday’s report is the last major inflation reading before the December meeting. The October personal consumption expenditures report, the Fed’s preferred inflation gauge, is due on November 25.
Sources: Reuters — “US producer prices rise further in October” (https://www.reuters.com/business/us-producer-prices-rise-further-october-2026-11-13/); US Bureau of Labor Statistics.
