• Yearly increase remains record for headline series.

• Core goods prices are strong.

• Energy prices surge again.

The Producer Price Index for Final Demand rose 0.6% in October following a 0.5% gain in September. The y/y increase remained at a record high of 8.6%. The series dates back to 2009. A 0.7% rise had been expected by the Action Economics Forecast Survey. The PPI excluding food and energy rose 0.4% last month after a 0.2% gain. The y/y increase remained at the record 6.8%. A 0.5% increase had been expected. The PPI less food, energy and trade services also rose 0.4% (6.2% y/y), double the September rise.

Higher energy prices led last month's rise in the PPI with a 4.8% (42.4% y/y) increase. Gasoline prices surged 6.7% in October (89.9% y/y) while home heating oil prices rose 13.0% (114.8% y/y). Natural gas prices increased 3.8% last month (28.7% y/y) but the cost of electric power eased 0.3% (+5.6% y/y).

Food prices eased 0.1% during October (+10.5% y/y) and offset some of this energy price strength. Beef & veal prices fell 10.3% (+41.5% y/y) but the cost of dairy products increased 1.1% (1.9% y/y). Vegetable price rose 14.6% (NSA, -5.9% y/y) while egg prices fell 12.1% (NSA, -4.3% y/y).

Finished consumer goods prices less good & energy rose 0.3% in October (5.5% y/y). Nondurable consumer goods prices gained 0.3% (4.7% y/y), the smallest monthly increase since April. Durable consumer goods prices edged 0.1% higher last month (6.9% y/y). Prices for private capital equipment strengthened 0.4% (5.6% y/y) and have been strong since the spring.

Services prices rose a diminished 0.2% in October (5.9% y/y) for the second straight month. Trade services prices rose 0.4% (8.5% y/y) and also have been strong since the spring. Prices less trade, transportation & warehousing edged 0.1% lower (+4.2% y/y).

Construction product prices surged 6.6% last month (12.3% y/y) reflecting a 7.5% rise (13.3% y/y) in construction costs for private capital investment.

Intermediate goods prices jumped 2.1% (25.4% y/y) due to a 29.1% surge (160.0% y/y) in unprocessed fuel costs.

The PPI data are published by the Bureau of Labor Statistics and can be found in Haver's USECON database. Further detail is contained in PPI and PPIR. The expectations figures are available in the AS1REPNA database.

Opening Remarks by Fed Chair Jerome H. Powell at today's Bank of Canada conference can be found here.