U.S. producer prices increased solidly in October, driven by surging costs for gasoline and motor vehicle retailing, suggesting that high inflation could persist for a while amid tight global supply chains related to the pandemic.
The Federal Reserve last week restated its belief that current high inflation is "expected to be transitory." A tightening labor market as millions remain at home is adding to price pressures, which together with shortages of goods sharply restrained economic growth in the third quarter.
The Fed this month started reducing the amount of money it is injecting into the economy through monthly bond purchases.
"The acceleration in inflation may not fade as quickly as previously thought, particularly for businesses because of the global supply-chain issues," said Ryan Sweet, a senior economist at Moody's Analytics in West Chester, Pennsylvania. "Elevated inflation is turning up the heat on the Fed but they haven't shown signs of buckling as they will stomach higher inflation to get the labor market back to full employment quickly."