U.S. wholesale prices in October rose 6.5% year-on-year… Highest in about 4 years (overall)

(New York = Yonhap News) Correspondent Kim Yeon-sook = Last October, U.S. wholesale prices rose by the largest amount in about four years compared to the previous year.

The U.S. Department of Labor's Bureau of Labor Statistics announced on the 13th (local time) that the U.S. producer price index (PPI) rose 6.5% in October compared to the previous year.

This is the highest increase rate since November 2022 (7.4%).

The increase rate compared to the previous month was 0.3%, which was lower than the expert forecast (0.4%) compiled by Dow Jones. This is a significant slowdown compared to the 1.4% surge in September compared to the previous month.

The producer price index, excluding highly volatile energy and food prices, rose 0.3% from the previous month and 5.0% from the previous year.

The goods sector rose 0.5%, leading the overall index rise.

In particular, food prices rose 1.3% compared to the previous month, recording the largest increase since February.

Energy prices, which soared 10.0% in September, fell 0.1% in October. However, while gasoline rose by 0.5%, natural gas prices soared by 21.4%, showing a wide gap between sub-items.

Electronic computers and equipment recorded a flat rate (0.0%).

The service sector rose 0.2%, continuing its upward trend for five consecutive months.

The Ministry of Labor explained that three-quarters of the increase in October came from transportation and warehouse service prices (2.0% increase).

On the other hand, distribution service margins fell by 0.2%.

Producer prices, also called wholesale prices, are accepted as a leading indicator of consumer prices in that they are reflected in the prices of final consumer goods with a certain time lag.

The market estimates that the monthly increase in the producer price index fell below expectations, easing some concerns about the Federal Reserve's (Fed) aggressive tightening policy.

Some service items, such as hospital outpatient treatment costs, which are reflected in the calculation of personal consumption expenditures (PCE), the Federal Reserve's preferred price index, showed stability, and prices of nursing homes and legal services fell, which also eased the burden on the market.

According to FedWatch of the Chicago Mercantile Exchange (CME), the interest rate futures market on this day predicted an 89.7% probability that the Federal Reserve will raise the benchmark interest rate by 25bp (1bp = 0.01% point) at the Federal Open Market Committee (FOMC) meeting next month, and a 10.3% probability of a 50bp increase.

Compared to the previous day, the probability of a 25bp increase increased by 4.2% points, and the probability of a 50bp increase decreased.