A gas pump is seen in a car at a Shell gas station in Washington, D.C.

A gas pump is seen in a car at a Shell gas station in Washington, D.C. on May 15, 2021.

WASHINGTON (Reuters) — 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 supply chains related to the pandemic.

The producer price index for final demand rose 0.6% last month after climbing 0.5% in September, the Labor Department said on Tuesday. In the 12 months through October, the PPI increased 8.6% after a similar gain in September.

Economists polled by Reuters had forecast the PPI advancing 0.6% on a monthly basis and rising 8.7% year-on-year.

"The acceleration in U.S. 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 Federal Reserve but they haven't shown signs of buckling as they will stomach higher inflation to get the labor market back to full employment quickly."

More than 60% of the increase in the PPI last month was due to a 1.2% rise in the prices of goods, which followed a 1.3% jump in September. A 6.7% surge in gasoline prices accounted for a third of the rise in goods prices. There were increases in the prices of diesel, gas and jet fuel as well as plastic resins.

Wholesale food prices dipped 0.1% as the cost of beef and veal tumbled 10.3%. Prices for light motor trucks fell as the government introduced new-model-year passenger cars and light motor trucks into the PPI.

Services gained 0.2% last month after a similar rise in September. An 8.9% jump in margins for automobiles and parts retailing accounted for more than 80% of the increase in services. The cost of transportation and warehousing services jumped 1.7%.

There were also increases in the wholesale prices of apparel, footwear, truck transportation of freight, food and alcohol retailing, hospital outpatient care as well as machinery, equipment parts and supplies. But portfolio management fees fell.

Excluding the volatile food, energy and trade services components, producer prices shot up 0.4%. The so-called core PPI gained 0.1% in September. In the 12 months through October, the core PPI rose 6.2%. That followed a 5.9% advance in September.

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