WASHINGTON (dpa-AFX) - Partly reflecting a jump in prices for trade services, the Labor Department released a report on Friday showing a much bigger than expected increase in U.S. producer prices in the month of October.
The Labor Department said its producer price index for final demand climbed by 0.6 percent in October after rising by 0.2 percent in September. Economists had been expecting another 0.2 percent uptick.
The report showed a substantial rebound in energy prices, which surged up by 2.7 percent in October after slumping by 0.8 percent in September.
Food prices also showed a notable rebound during the month, jumping by 1.0 percent in October after falling by 0.6 percent in September.
Nonetheless, excluding food and energy prices, core producer prices still rose by 0.5 percent in October after edging up by 0.2 percent in September. Core prices had been expected to rise by another 0.2 percent.
The bigger than expected increase in core prices came as prices for final demand services climbed by 0.7 percent in October after rising by 0.3 percent in September.
Prices for trade services led the way higher, spiking by 1.6 percent, while prices for transportation and warehousing services increased by 0.6 percent and prices for other services edged up by 0.2 percent.
Compared to the same month a year ago, producer prices in October were up by 2.9 percent, reflecting an acceleration from the 2.6 percent increase in September.
The annual rate of growth in core consumer prices also accelerated modestly to 2.6 percent in October from 2.5 percent in September.
'Overall, the producer prices data show that inflationary pressures remain fairly strong, which will keep the Fed hiking rates once a quarter in the near term,' said Andrew Hunter, U.S. Economist at Capital Economics. 'But there is little sign that a more marked acceleration lies around the corner.'
Next Wednesday, the Labor Department is scheduled to release a separate report on consumer price inflation in the month of October.
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