U.S. Producer Inflation Hits Four-Year High, Bolstering Fed Hike Bets

The U.S. producer-price index rose 6.5% from a year earlier in October, its largest annual increase since November 2022, reinforcing expectations for a Federal Reserve rate hike in December.

Annual inflation accelerated from 6.3% in September. On a monthly basis, producer prices rose 0.3%, below the 0.4% increase expected, while September’s monthly figure was revised up to 1.4%. Goods prices increased 0.5%, led by food and basic organic chemicals. Services rose 0.2%, the fifth consecutive monthly gain.

Markets were weighing a 25-basis-point hike at the Fed’s December meeting while leaving room for a 50-basis-point increase after comments from Federal Reserve Gov. Waller. The inflation reading adds to rate uncertainty for markets, including crypto, which is sensitive to changes in borrowing costs.

The report came after October consumer-price inflation exceeded expectations. The unemployment rate also fell to 4.1% from 4.2% in September, adding to signs of strength in the labor market.