US Wholesale Prices Rise 6.5% in a Year, Most Since November 2022
October PPI rose 0.3%, a tick under the 0.4% forecast. Futures still price a Fed hike on Dec. 9 as certain, and the 10-year yield is above 5.15%.
Wholesale prices in the U.S. rose 6.5% in the 12 months to October, the Bureau of Labor Statistics said at 8:30 a.m. ET Friday. That's the biggest annual increase since November 2022.
The monthly number was softer. The producer price index (PPI) rose 0.3% in October, a tick below the 0.4% that economists polled by Dow Jones expected, after a 1.4% jump in September (revised from 1.3%), CNBC and InvestmentNews reported.
What the producer price index measures
PPI tracks the prices U.S. businesses get for their goods and services before those reach consumers. Core PPI leaves out food and energy, which swing the most; it rose 0.3%, in line with forecasts. A narrower gauge that also strips out trade services rose 0.5%. "It is economics 101 that producer prices lead consumer prices," Chris Rupkey, chief economist at FWDBONDS, said, as quoted by CNBC.
Energy was the exception. The energy index slipped 0.1% after a 10% rise in September, and diesel fell 7.9%, UPI and TheStreet reported.
Futures put December hike odds at 100%
The 10-year Treasury yield rose about 5 basis points to above 5.15% on Friday morning, CNBC reported. A basis point is 0.01 percentage point. Higher yields lift borrowing costs on mortgages and car loans, and they raise the bar for assets that pay no interest, like bitcoin.
Traders priced a 100% chance of a Fed rate increase at the Dec. 8-9 meeting, with about 86% on a quarter point and 14% on a half point, per CME Group's FedWatch tool as cited by CNBC.
Chicago Fed President Austan Goolsbee said on CNBC the central bank "has definitely got work to do to continue to reestablish its credibility." He isn't an FOMC voter this year but will be in 2027.
Bitcoin was near $68,650 at 12 p.m. ET, down 4.2% over 24 hours, per CoinGecko.
In our opinion: the monthly miss is the smaller headline. Goolsbee said inflation has been above the Fed's 2% goal for almost six years and is "going the wrong way," and the bond market is pricing a hike as a done deal. The number to circle is the Dec. 9 decision, and whether it's a quarter point or a half.
Sources: U.S. Bureau of Labor Statistics: Producer Price Index news release · CNBC: Wholesale prices rose 0.3% in October, putting annual rate at 6.5% · InvestmentNews: PPI still 'uncomfortably high' as December rate hike looms · UPI: Annual inflation hit 6.5% in October · TheStreet Pro: Headline producer prices cool, but core hits highest annual rate · CNBC: 10-year Treasury yield moves to 5.15% as traders weigh producer price repo · CNBC: Chicago Fed's Goolsbee says central bank 'has definitely got work to do' o · CME Group: FedWatch tool · CoinGecko: Bitcoin price (Powered by CoinGecko)
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