U.S. 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 percent, driven by a jump in prices in the services sector. The PPI had declined 0.1 percent in September.
Economists had expected prices received by the nation's farms, factories and refineries to slip 0.1 percent 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 percent, the smallest advance since February, after rising 1.6 percent in September.
A broader measure of producer inflation, which excludes food, energy and trade services, edged up only 0.1 percent after slipping 0.1 percent in September. It was up 1.6 percent in the 12 months through October.
Last month, prices for services rose 0.5 percent, the largest rise since July 2013. They had declined 0.1 percent in September.
In October, energy prices fell 3.0 percent after declining 0.7 percent 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 U.S. central bank's 2 percent target has diminished somewhat since early this year.
Food prices increased 1.0 percent, ending two straight months of declines.