WASHINGTON – U.S. producer prices rose sharply in October on big increases in the cost of gasoline, cars and light trucks, the government said Friday in a report that showed more inflation at the wholesale level than economists had expected.
The producer price index, a measure of prices received at the farm and factory gate, rose 1.1 percent last month after a 0.1 percent gain in September, the Labor Department said.
The "core" PPI, which strips out volatile food and energy costs, increased 0.5 percent in October after a 0.1 percent rise a month earlier. It was the biggest rise in the core index since a matching 0.5 percent gain in September 1999.
Economists polled by Reuters had forecast, on average, a 0.2 percent rise in the PPI and a 0.1 percent gain outside food and energy. Excluding a 2.2 percent rise in car prices and a 1.9 percent gain in the cost of light trucks, the core PPI would have been up only 0.1 percent in October.
October's increase in passenger car prices was the biggest since a 3 percent rise in September 1990, while the gain in the cost of light trucks was the largest since a 2 percent increase in July 2001.
Energy prices also rose sharply last month, gaining 4.2 percent, in large part due to a 17.9 percent rise in the cost of gasoline — the biggest gain since March. The department said that if the rise in gas costs was excluded, the overall PPI would have been up a tamer 0.6 percent.
Food prices rose 0.7 percent in October after dropping 0.6 percent a month earlier.
The sharp rise in producer prices in October pushed the 12-month change up to a gain of 0.6 percent, compared to the 1.9 percent drop the PPI registered in the 12 months that ended in September.
The department releases consumer price index data for October on Tuesday. Analysts expect a 0.3 percent rise in the CPI and a 0.2 percent gain excluding food and energy prices.
Federal Reserve Chairman Alan Greenspan said on Wednesday that a lack of inflation had given the central bank room to slash interest rates sharply last week as insurance against the possibility the U.S. economy, which he said had hit a "soft patch," might weaken further.