- The producer price index rose a seasonally adjusted 0.3% in October, less than the 0.4% Dow Jones consensus, the Bureau of Labor Statistics reported Friday, CNBC said. Core PPI, stripping out food and energy, rose 0.3%, in line with forecasts. On an annual basis, headline PPI accelerated 6.5%, up 0.2 percentage point and the highest 12-month rate since November 2022.
- Beneath the slightly softer monthly headline, several components were still hot. Goods prices increased 0.5% in October, and the goods index jumped 10.2% from a year earlier, the biggest 12-month surge since October 2022. Intermediate processed goods soared 14.6% from October 2025, the biggest annual gain since July 2022, and intermediate services rose 6.9%, the most since November 2022. Stripping out food, energy and trade services, PPI increased 0.5% in October. Final-demand services rose 0.2%, with truck transportation of freight up 3.9%.
- Chicago Fed President Austan Goolsbee, speaking on CNBC’s “Squawk Box” after the release, said the central bank “has definitely got work to do to continue to reestablish its credibility.” He said inflation has been “above 2% for almost six years,” that “lately we’re not making any progress, and if anything, it’s going the wrong way,” and that besides persistent supply shocks there is now “old-fashioned demand overheating coming from the AI data center buildout, that looks like it’s starting to spread out of its lane.”
- Markets are fully pricing a quarter-point increase at the Federal Open Market Committee’s Dec. 8-9 meeting, with slight odds of a half-point hike, CNBC said. Goolsbee is not currently an FOMC voter but will be in 2027. Earlier in the week, Fed Governor Christopher Waller said he would entertain a 50-basis-point move depending on the inflation data. Northlight Asset Management’s Chris Zaccarelli said the PPI report is “unlikely to change the Fed’s approach in December because the CPI data was already outside their comfort zone.” October CPI rose 0.4%, and core CPI 0.3%, both 0.1 percentage point above forecasts.
What Happened?
The 0.3% monthly PPI print was the one softer-than-expected number in an otherwise firm inflation week, and the annual 6.5% rate, together with a 10.2% jump in goods and a 14.6% surge in intermediate processed goods, kept the “silver lining” argument from taking hold. Because of the October 2025 government shutdown, the BLS did not publish a 12-month CPI figure, which makes the annual PPI reading one of the clearer trend measures investors have this month. Goolsbee’s comment that inflation is spreading beyond oil and tariffs, and that AI data-center demand is starting to overheat the economy, links the price data to the same build-out that is roiling risk assets.
Why It Matters?
For the Fed, a slightly lighter monthly wholesale figure does not unwind a CPI surprise or a 6.5% annual PPI rate that is the highest in nearly four years. Waller has already put a half-point hike on the table, and futures assign a small but real probability to that outcome. Goolsbee, though not voting until 2027, is a closely watched voice, and his warning about credibility and stalled progress toward 2% will be read as support for staying restrictive in December.
What’s Next?
The next inflation-related data are next week’s import and export price indexes, retail sales and the FOMC minutes. Investors will watch whether Goolsbee’s “spreading out of its lane” language is echoed by other officials, and whether the odds of a 50-basis-point December move rise if those reports are firm. The Dec. 8-9 meeting remains the date when this week’s CPI and PPI have to be turned into a rate decision.
