Consumer prices rose more than expected in October, but the increases are not as worrisome as those seen in the producer price index released a day ago.
The consumer price index rose 0.6%, vs. 0.2% in September, the government said Wednesday. Economists expected a 0.4% increase. Excluding food and energy costs, prices rose 0.2%, vs. 0.3% a month ago and a consensus forecast of 0.1%
The government Tuesday said its producer price index rose 1.7% in October, about three times the rate of growth that economists were expecting. Excluding the impact of food and energy, prices rose 0.3%, matching September's increase, but also more than expected. Prices for energy goods turned up 6.8%. Prices for gasoline, for instance, climbed 17.3%. Food prices rose 1.6%.
The unexpected jump in inflation may influence the
thinking on interest rate policy in the months ahead, after several months of moderating, if not minimal, inflation. Prior to the CPI and PPI data, economists were divided over whether the central bank would raise interest rates a quarter of a percentage point for the fifth time since late June when its meets in December. The federal funds rate is currently at 2%.
Price developments in October, however, may not be a good indicator of overall trends. Crude oil prices spiked to a record high of $55.17 during the month, and some of the agricultural sector was still recovering from the wave of hurricanes in September. Inflation indicators jumped for several months earlier this year, then moderated through the summer.