Producer prices rise 6.5%, most since 2022, as December Fed hike nears
U.S. producer prices rose 6.5% over the year to October, the steepest since November 2022, days after consumer prices also beat forecasts — and all 101 economists polled by Reuters expect a December Fed hike.
Producer prices: the 6.5% print
U.S. producer prices rose 0.3% in October after a 1.4% jump in September and a 0.4% rise in August, the Bureau of Labor Statistics reported on Friday. Over the 12 months to October, the index rose 6.5%, the largest 12-month rise since November 2022, when it was 7.4%. Goods prices rose 0.5% in the month and 10.2% over the year, the largest since October 2022, when they were 10.5%. Services rose 0.2% for a fifth straight month, with transportation and warehousing up 2.0% and truck freight up 3.9%. The core index, excluding food, energy and trade margins, rose 0.5% in the month and 4.9% over the year. Processed goods for intermediate demand rose 14.6% over the year, the largest since July 2022, when they were 17.2%. Diesel fuel fell 7.9% and crude petroleum fell 10.3%.
Consumer prices pointed the same way
Consumer prices told the same story. The consumer price index rose 0.4% in October after a 0.6% rise in September, the Bureau of Labor Statistics reported on Tuesday, above the 0.3% economists had expected. Shelter rose 0.3% and accounted for over 30% of the increase, while food rose 0.5% and energy rose 0.7%. The core index, excluding food and energy, rose 0.3% for a third straight month. Gasoline rose 1.0% after a 9.1% jump in September, and used cars fell 1.2%. No 12-month rate was published, because data for October 2025 was not collected during the lapse in appropriations. The index level stood at 337.511.
- 6.5%Producer prices, 12 months to October — largest rise since November 2022
- 0.4%Consumer prices in October, above the 0.3% expected
- 10.2%Goods prices, 12 months to October
- 4.9%Core producer prices, 12 months to October
- 337.511Consumer price index level in October
What the Fed is expected to do
All 101 economists in a Reuters poll conducted November 6–10 expect the Fed to raise its policy rate by 25 basis points on December 9, to 4.00%–4.25%, from the current 3.75%–4.00%. 56 of them see that as the peak for this cycle, and most expect inflation to stay more than 1 percentage point above the Fed's 2% target for several quarters, not returning to target until at least 2028. Growth is expected to run 2.2% this quarter after 3.4% in the third quarter. Fed Governor Christopher Waller has said a quarter-point move is warranted even if inflation cools, and a 50-basis-point move if it stays hot. At a London event on Tuesday, he said that if core consumer prices rose 0.3% or more, he would back a half-point hike — and core prices did rise 0.3% in October. MarketWatch reported that traders now put a 12% chance on rates reaching 4.25%–4.5%, and the 2-year Treasury yield rose 12 basis points on the day. The 10-year yield is above 5%. The Federal Open Market Committee meets December 8–9.
