Implications: After surging in September, producer prices rose 0.3% in October, bringing the year-ago comparison to 6.5%, the highest in almost four years.  Nothing in the report is likely to dissuade the Federal Reserve from raising short-term interest rates at the next meeting in December.  Overall producer prices are up 6.5% in the past year, more than double the change from the twelve months ending October 2025.  Prices excluding food and energy rose 0.5% for the month and are up 5.0% from a year ago as a combination of increased demand from the data center buildout and the second-order effects of higher energy prices worked their way through the economy.  Looking at the details, goods prices rose 0.5% in October and are up 10.2% in the past year, a four-year high.  Goods excluding food and energy accounted for more than 60% of the monthly increase, led by a 1.6% rise in government-purchased goods. Notably, prices for communications equipment and electronic components are up 11.9% and 31.7%, respectively, over the past year, the largest annual increases on record going back to at least the 1980s.  Prices for gasoline rose 0.5% in October and are up 75.9% in the past year, while prices for diesel fell 7.9%, but are still up a whopping 115% from a year ago (not a typo!).  On the services side, prices rose a more moderate 0.2%, with transportation and warehousing accounting for most of the increase, rising 2.0% in October.  Trucking freight prices rose 3.9%, while water freight prices increased 1.1%.  Further back in the supply chain, annual price changes for intermediate goods, both processed and unprocessed, remain near the highest levels since 2022.

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