**MNI 5 THINGS:US October PPI Above-Expected +0.6%,Core +0.5%>

--5 Things We Learned From The October PPI Data

By Kevin Kastner, Harrison Clarke, and Shikha Dave

     WASHINGTON (MNI) - The following are the key points from the 

Producer Price Index data for October released by the Labor Department 

Friday: 

     - The October PPI data were well above expectations, with a 0.6% 

gain for the overall reading and a 0.5% increase for the ex-food and 

energy reading, but mask slower growth outside of the most volatile 

components. Energy and foods prices both surged, and trade services 

posted a solid 1.6% gain. However, PPI ex. trade services, food, and 

energy was up only 0.2% after a 0.4% gain in the previous month. BLS 

made no comments about hurricane impacts, but it is clear that energy 

and food prices were influenced by the storms. 

     - As a result, the overall year/year rate of inflation moved higher 

in October. Overall PPI is now up 2.9% y/y vs 2.6% in September. At the 

same time, core PPI ticked up to 2.6% y/y vs 2.5% in September. PPI ex 

food, energy and trade services slowed to 2.8% y/y from 2.9% in the 

previous month. 

     - The personal consumption price measure in the data, which some 

analysts use as a preview measure for the CPI and PCE price data, was up 

0.8% overall and up 0.6% excluding food and energy after gains of 0.1% 

and 0.2%, respectively, in September, suggesting somewhat stronger 

readings for the other inflation data still to come for the month. 

Outside of food, energy and trade services, the personal consumption 

measure was up only 0.2%. The year/year rates for all three measures 

remained above 2%. 

     - Energy prices posted a 2.7% rebound in October after a 0.8% 

decline in September, with a 7.6% jump in gasoline prices a key factor. 

Food prices rose 1.0% in the month on widespread gains, while the 

volatile trade services component was posted its 1.6 rise% in October 

after a small gain in September and large decline in August. Within the 

core, there noticeable increase for cars (-1.0%) and light trucks 

(-0.6%). 

     - When the sharp gains in those volatile categories are removed, 

the 0.2% increase in the remaining items and the slightly softer 2.8% 

y/y gain suggests underlying wholesale inflation did not advance as 

rapidly as the shocking headline numbers would suggest. The CPI data 

will be released on Wednesday and should provide more context. 

     ** MNI Washington Bureau: 202-371-2121 ** 

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