WASHINGTON (Reuters) – U.S. producer prices increased by the most in six months in October, lifted by gains in the costs of goods and services, further bolstering the Federal Reserve’s stance that it will probably not cut interest rates again in the near term.
The report from the Labor Department on Thursday showed healthcare costs accelerated last month, with the cost of outpatient care at hospitals posting its largest rise since 2009. The jump in healthcare prices mirrored gains reported in October’s consumer price index report on Wednesday.
Healthcare - Costs - Inflation - Trend - Moderation
Rising healthcare costs, if sustained, suggest inflation could trend higher, though it is not likely to become troublesome because of a moderation in the pace of rent increases.
The U.S. central bank last month cut rates for the third time this year and signaled a pause in the easing cycle that started in July when it reduced borrowing costs for the first time since 2008. Fed Chair Jerome Powell reiterated that stance in testimony before lawmakers on Wednesday.
Producer - Price - Index - Demand - %
The producer price index for final demand rose 0.4% last month, the biggest increase since April, after falling 0.3% in September. In the 12 months through October, the PPI climbed 1.1%, the smallest increase since October 2016, after advancing 1.4% in the 12 months through September. Annual producer inflation retreated as last year’s hefty gain dropped out of the calculation.
Economists polled by Reuters had forecast the PPI would rise 0.3% in October and climb 0.9% on a year-on-year basis.
Food - Energy - Trade - Services - Components
Excluding the volatile food, energy and trade services components, producer prices edged up 0.1% after being unchanged in September. The so-called core PPI increased 1.5% in the 12 months through October after gaining 1.7% in the 12 months through September. Annual core PPI also slowed last month as last October’s increase dropped out of the calculation.
The data came on the...
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