Wholesale prices rose less than expected in October, but inflation pressures persisted and the Federal Reserve is likely to continue targeting an interest rate hike 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, versus the Dow Jones consensus of a 0.4% increase, the Bureau of Labor Statistics reported Friday. The headline PPI accelerated 6.5%, an increase of 0.2 percentage points, the highest annual rate since November 2022. The report is released just weeks before the Federal Reserve’s next monetary policy meeting on December 8-9. Markets are pricing in a quarter-percentage-point increase in the central bank’s key overnight borrowing rate, with the Federal Open Market Committee unlikely to opt for a half-point increase. Stock market futures added to gains after the release, while Treasury yields were mixed. Earlier this week, the BLS reported that inflation at the cash register was higher than expected. The general consumer price index saw an increase of 0.4% in October, while the core rose 0.3%, both 0.1 percentage points. higher 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 numbers showed that the Fed remains a good distance away from its 2% inflation target. “Today’s PPI data, which shows some signs of improvement, although still too high, is unlikely to change the Fed’s approach in December because the CPI data was already outside its comfort zone,” said Chris Zaccarelli, chief investment officer at Northlight Asset Management. spread through the economy. The Federal Reserve would generally view such price pressures as temporary, but the breadth of inflation could indicate that inflation is becoming more entrenched. “We’ve had some signs of trouble for several months in a row,” Chicago Federal Reserve President Austan Goolsbee said in an interview with CNBC on Friday. “If you look at how widespread inflation is, 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’re still seeing progress stagnating and in some cases going in the wrong direction.” Excluding food, energy and business services, the PPI saw a 0.5% increase in October. for goods excluding food and energy, which in fact experienced a decrease of 0.1%. On an annual basis, the goods index rose 10.2%, the largest 12-month increase since October 2022. Prices for final demand services rose 0.2%, most of which was related to transportation and warehousing services, and within that category, a 3.9% increase in truck freight transportation. “We’ve been above 2% for almost six years and while we’re making progress at times, we’re not making any progress lately and if anything we’re on the wrong track,” Goolsbee said. “Inflation is rising; it has proven to be much more persistent than we initially predicted due to supply shocks.” Other elements of the PPI report also showed multi-year gains. Prices for processed intermediate goods have soared 14.6% since October 2025, the largest annual gain since July 2022. Intermediate prices for services posted a 6.9% increase, the largest since November 2022.
