U.S. producer prices dropped in October for a second straight month and the cost of services fell, pointing to subdued inflation pressures that would argue against the Federal Reserve raising interest rates next month.
The Labor Department said on Friday its producer price index fell 0.4 percent last month after falling 0.5 percent in September. In the 12 months through October, the PPI fell 1.6 percent, the largest decline since the revamped series started in 2009 and following on the heels of a 1.1 percent drop in September.
October also marked the ninth straight 12-month decrease in the index. Economists polled by Reuters had forecast the PPI rising 0.2 percent last month and dropping 1.2 percent from a year ago.
A strong dollar and tepid global demand have dampened price pressures, leaving inflation constantly running well below the Fed's 2 percent target. Despite weak inflation, economists expect the U.S. central bank will raise interest rates next month after a robust employment report for October.