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Services lift US producer prices in October
[WASHINGTON] US producer prices unexpectedly rose in October, but the underlying trend continued to point to a benign inflation environment that could persuade the Federal Reserve to keep interest rates very low a bit longer.
The Labor Department said on Tuesday its producer price index for final demand increased 0.2 per cent, driven by a jump in prices in the services sector. The PPI had declined 0.1 per cent in September.
Economists had expected prices received by the nation's farms, factories and refineries to slip 0.1 per cent last month. October also saw the introduction of prices for new motor vehicle models, which could also have contributed to the unexpected increase in producer prices last month.
In the 12 months through October, producer prices increased 1.5 per cent, the smallest advance since February, after rising 1.6 per cent in September.
A broader measure of producer inflation, which excludes food, energy and trade services, edged up only 0.1 per cent after slipping 0.1 per cent in September. It was up 1.6 per cent in the 12 months through October.
Last month, prices for services rose 0.5 per cent, the largest rise since July 2013. They had declined 0.1 per cent in September.
In October, energy prices fell 3.0 per cent after declining 0.7 per cent in September. The cost of energy has now declined for four straight months, falling in response to spotty global economic growth.
Fed officials largely view the current low inflation environment as transitory and believe the likelihood of inflation running persistently below the US central bank's 2 per cent target has diminished somewhat since early this year.
Food prices increased 1.0 per cent, ending two straight months of declines.