The seasonally adjusted Producer Price Index (PPI) for final demand rose 0.4% in October, as prices for finished wholesale goods increased 0.3%, while margins of final services providers increased by 0.5%.  This followed a September report that indicated the overall PPI had increased by 0.4%, as prices for finished wholesale goods increased 0.7%, while margins of final services providers increased by 0.4%, and an August report that indicated the PPI was up 0.2%, with prices for finished wholesale goods up 0.5%, and margins of final services providers up 0.1%.  Excluding food, energy and trade services, core producer prices were up 0.2% in October, after also rising 0.2% in both August and September.  On an unadjusted basis, producer prices are now 2.8% higher than a year earlier, the highest annual producer inflation reading since the same increase was logged in February 2012, while the year over year core producer price index rose to 2.3% higher than a year earlier.

As we noted, the price index for final demand for goods, aka 'finished goods', rose 0.3% in October, after rising 0.7% in September, 0.5% in August, slipping 0.1% in July, being unchanged in June, falling by a revised 0.5% in May, rising by 0.5% in April, falling by 0.2% in March, and rising by 0.4% in February and by 1.0% in January.  The index for wholesale energy prices was unchanged in October after rising 3.4% in September and 3.3% in August, while the price index for wholesale foods rose 0.5% and the index for final demand for core wholesale goods (ex food and energy) was 0.3% higher.  The largest wholesale energy price change was a 14.5% increase in the wholesale price of home heating oil and distillates, while the wholesale price of gasoline fell 4.5%.  Meanwhile, a 29.0% increase in the wholesale price of eggs and a 12.1% increase in wholesale prices for fresh and dry vegetables pushed the food index higher.  Among wholesale core goods, wholesale prices for pharmaceutical preparations rose 2.1% and accounted for nearly half of the increase in goods prices, while the index for industrial chemicals was 5.2% higher.

At the same time, the index for final demand for services rose 0.5% in October, after rising 0.4% in September, 0.1% in August, and after a revised 0.1% increase in July and a revised unchanged June, as the October index for final demand for trade services rose 1.1%, the index for final demand for transportation and warehousing services rose 1.0%, while the index for final demand for services less trade, transportation, and warehousing services was 0.1% higher..  Among trade services, seasonally adjusted margins for fuels and lubricants retailers increased 24.9% and accounted for nearly half of the increase in services, while margins for book retailers fell 10.8%.  Among transportation and warehousing services, margins for airline passenger services were 3.2% higher and margins for rail passenger services rose 1.6%.  In the core final demand for services index, the index for portfolio management rose 1.7%, while the index for gaming receipts (partial) fell 2.3%...

This report also showed the price index for processed goods for intermediate demand was 1.0% higher, after rising 0.5% in September, 0.4% in August, but after falling by a revised  0.1% in July and rising by a revised 0.1% June.  The price index for intermediate energy goods rose 1.8% as producer prices for diesel fuel rose 8.4% and industrial electric power rose 3.0%, while prices for intermediate processed foods and feeds rose 0.8% on a 4.7% jump in wholesale prices for prepared animal feeds.  Meanwhile the core price index for processed goods for intermediate demand less food and energy was also 0.8% higher on a 5.2% increase in the index for industrial chemicals.  Prices for intermediate processed goods are now 5.0% higher than in September a year ago, now the twelfth consecutive year over year increase, after 16 months of negative year over year comparisons, as intermediate goods prices fell every month from July 2015 through March 2016....

At the same time, the price index for intermediate unprocessed goods was unchanged in October, after falling  0.4% in September, 0.7% in August, but after rising a revised 0.1% in both June and July.   The price index for crude energy goods rose 2.1% as crude oil prices rose 6.6%, while the index for unprocessed foodstuffs and feedstuffs rose 0.4%, as increases in the indexes for slaughter cattle, ungraded chicken eggs and farm fresh vegetables (except potatoes) more than offset a 13.0% drop in prices for slaughter hogs.  However, the index for core raw materials other than food and energy materials fell 3.7%, as prices for carbon steel scrap fell 9.5 and prices for wastepaper fell 28.8%.  This raw materials index is still up 7.7% from a year ago, up from the year over year increase of 7.0% that we saw in September...

Lastly, the price index for services for intermediate demand rose 0.3% in October after rising 0.1% in September and 0.2% in August, but after falling a revised 0.1% in July.  The index for trade services for intermediate demand was 0.5% higher, as margins for metals, minerals, and ores wholesalers rose 5.7 percent.  The index for transportation and warehousing services for intermediate demand was also up 0.5%, as intermediate prices for transportation of passengers (partial) rose 3.0%.  Meanwhile, the core price index for services less trade, transportation, and warehousing for intermediate demand was 0.2% higher, as margins for securities brokerage, dealing, and investment advice rose 2.0%.  Over the 12 months ended in October, the year over year price index for services for intermediate demand, which has never turned negative on an annual basis, is now 2.9% higher than it was a year ago...

(Note: the above was excerpted from my weekly economic synopsis at Marketwatch 666)