Producer Prices Drop 0.5% in October, Largest Decrease Since April 2020
The Labor Department released new data on Tuesday showing that the producer price index fell 0.5% in October, marking the largest decrease since April 2020. This drop comes after an 0.4% increase in September and was much lower than the 0.1% advance forecasted by economists polled by The Wall Street Journal.
The core producer price index, which excludes volatile food, energy prices, and trade services, rose 0.1% in October, down from an 0.3% gain in the prior month.
Year-over-year, headline PPI is up 1.3% in October, a decrease from the 2.2% reported in the prior month. Core prices are up 2.9% from a year earlier, which is slightly down from the 3% increase in October.
The cost of goods fell 1.4% in October after a 0.8% gain in the prior month, while the cost of services remained flat, down from a 0.2% gain in September. Energy prices fell 6.5% in October, and wholesale food prices fell 0.2%.
The overall data suggests that inflation in the pipeline is looking soft, especially with the drop in energy and food prices.
In response to the news, stocks were set to open higher on Wednesday, and the 10-year Treasury yield rose to 4.51% in early morning trading.
This report indicates that there may be some relief from the recent surge in inflation, but it will be important to continue monitoring the producer price index in the coming months.