The US Producer Price Index (PPI) rose 6.5% year-over-year in October, accelerating from 6.3% in September and marking the largest annual increase since November 2022. The monthly gain, however, cooled markedly, narrowing from 1.4% the prior month to 0.3%, below the market expectation of 0.4%.
According to a report by Investing.com, economists had expected the annual rate to accelerate to 6.6% in October; the actual result came in slightly below forecast. On a monthly basis, the advance in final demand PPI slowed noticeably, mainly reflecting energy prices shifting from a sharp rise in September to a modest decline.
Breaking down the components, energy prices fell 0.1% month-over-month in October, a stark contrast to the 10% increase in September; food prices rose 1.3%, faster than the prior month's 1.1%. Excluding volatile food and energy, core PPI rose 0.3% month-over-month, in line with market expectations, versus 0.8% the prior month; the annual core PPI rate held at 5%, unchanged from September.
Excluding food, energy and trade services, the annual PPI rate slowed from 5% in September to 4.9%, suggesting underlying price pressures eased slightly.
Note: Core PPI excludes food and energy; market expectations are economists' estimates.
Taking a longer view, the US PPI annual rate climbed steadily through 2026: 3.1% in January, 5.7% in April, a dip to 4.9% in July, 6.3% in September, and further up to 6.5% in October. In the chart below, the horizontal axis shows the months from January to October 2026, and the vertical axis shows the unadjusted annual rate (%):
The data, published by the US Bureau of Labor Statistics, measures the prices producers receive for items including energy, food, cars and services. The core indicator has long been regarded as an important reference for gauging underlying inflationary pressure.
By component, final demand goods prices rose 0.5% month-over-month in October, services rose 0.2%, and construction rose 1.8%. Key subcomponents are as follows:
Note: Weights are the Bureau's 2025 relative importance, rounded to one decimal place; food, energy and goods (excl. food and energy) are subcomponents of goods, while trade services and transportation and warehousing are subcomponents of services.
The Bureau noted that more than 60% of the 0.5% rise in October goods prices came from items excluding food and energy; about three-quarters of the 0.2% rise in services prices came from the 2.0% increase in transportation and warehousing services, with truck freight rates up 3.9% month-over-month, accounting for more than 80% of the services increase on its own. Among individual products, diesel fell 7.9% and basic organic chemicals rose 3.9%; upstream unprocessed energy materials fell 7.7%, with crude oil plunging 10.3%.
Overall, the slowdown in the October monthly gain stemmed mainly from energy turning negative; the main drivers of higher prices were services and goods excluding food and energy. Although the annual rate hit a nearly four-year high, both the monthly gain and the core monthly gain came in at or below expectations — a relatively neutral signal for the bond market that inflation is no longer accelerating. After the data release, US stock index futures extended gains, while US Treasury yields were mixed.
Market attention quickly shifted to the Federal Reserve's policy meeting on December 8-9. According to CNBC, traders have fully priced in a quarter-point (0.25 percentage point) rate hike, with a few betting on a half-point move. Chicago Fed President Austan Goolsbee said the issue is not just that inflation has been above target for some time, "but that in categories not driven by oil prices or tariffs, we are still seeing progress stall, and in some cases move in the wrong direction."
The October Consumer Price Index (CPI), released earlier this week, showed a 0.4% monthly gain and a 0.3% rise in core CPI, each 0.1 percentage point above market expectations; because the October 2025 government shutdown prevented some data collection, the annual CPI rate was not published this time.
By comparison, Taiwan's producer prices rose more sharply. Taiwan's Directorate-General of Budget, Accounting and Statistics reported on November 5 that the October producer price index rose 19.66% year-over-year, above the US reading of 6.5% for the same month; the consumer price index rose 2.33% year-over-year in the same month.