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Wholesale prices aren’t rising very much because of the coronavirus. There’s not enough demand to tug drive prices higher.
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The numbers: U.S. wholesale prices rose again in October, but there was little evidence of widespread inflation bubbling up in the economy with the coronavirus pandemic still casting a large shadow.
The producer price index advanced 0.3% last month, the government said Friday. It’s risen six months in a row since the economy reopened in May.
Economists polled by MarketWatch had forecast a 0.2% increase.
Wholesale inflation more broadly was largely muted, however. The increase in producer prices over the past 12 months edged up to 0.5% from 0.4%.
The index was growing at a yearly pace of 2% in January, shortly before the pandemic erupted.
Read: U.S. jobless claims fall to pandemic low of 709,000
What happened: The rising cost of food such as vegetables, meat, chicken and eggs was the biggest contributor to the increase in wholesale prices last month, the government said. They accounted for about three-fourths of the 0.5% increase in the cost of goods.
The cost of services advanced a smaller 0.2% and was largely centered on transportation.
Another measure of wholesale inflation that’s less prone to sharp swings, known as the core rate, increased 0.2% last month. The core rate has risen just 0.8% in the past 12 months.
Prices pressures were also weak in the earlier stages of the production process. The cost of raw and partly finished goods rose in October, but prices for both have actually fallen in the past 12 months.
Read: Biden to talk more diplomatically toward China, but keep Trump’s big tariff ‘stick’
Big picture: Inflation is low by most measures and likely to stay that way until the pandemic ends and the economy is largely recovered. Businesses lack sufficient demand to raise prices and cautious consumers are reluctant to spend any more than they have to.
Read: The cost of living — aka inflation — unchanged in October
Market reaction: The Dow Jones Industrial Average DJIA, -1.08% and S&P 500 SPX, -0.99% were set to open higher in Friday trades. Stocks fell on Thursday on worries the record increase in coronavirus cases will hurt the economy again.
