U.S. wholesale prices unexpectedly posted their biggest gain in seven months in October as food prices rose sharply and car prices spiked with the introduction of new models, according to a government report.
But stripping out those outsized gains, prices for wholesale goods were mostly well contained.
The Producer Price Index, which measures prices paid to farms, factories and refineries, shot up 0.8 per cent last month, the Labour Department said today.
A 2.2 per cent increase in food prices, the largest since January 1984, accounted for much of the gain. Energy prices slipped 0.1 per cent.
The so-called core rate, which strips out volatile food and energy prices, increased a sharp 0.5 per cent. But the introduction of new vehicle models, and associated price increases, played a major role in pushing the index higher.
The department said the core PPI was up just 0.2 per cent excluding sharply higher vehicle prices. Car prices rose 1.6 per cent and prices for small trucks and SUVs soared 3.4 per cent, their biggest jump since October 1985.
The report was at odds with expectations on Wall Street, where economists had expected overall producer prices to rise just 0.2 per cent with the core rate up 0.1 per cent.
The department releases the October consumer price index next week. Analysts had been expecting the CPI and the index excluding food and energy to both rise to rise 0.1 per cent.