Reuters

US producer prices fell by the most in three-and-a-half years in October amid a sharp drop in the cost of gasoline, the latest indication of subsiding inflation pressures.

The producer price index for final demand declined 0.5% last month, the largest decrease since April 2020, the Labour Department`s Bureau of Labour Statistics said on Wednesday. Data for September was revised lower to show the PPI increasing 0.4% instead of 0.5% as previously reported.

Economists polled by Reuters had forecast the PPI edging up 0.1%. In the 12 months through October, the PPI increased 1.3% after rising 2.2% in September. The report followed data on Tuesday showing consumer prices unchanged in October.

Cooling inflation together with slowing job and wage growth reinforced expectations that the US central bank`s fastest monetary policy tightening campaign since the 1980s was over.

Financial markets are even anticipating a rate cut next May, according to CME Group`s FedWatch tool. Since March 2022, the Fed has hiked its policy rate by 525 basis points to the current 5.25%-5.50% range.

Goods prices dropped 1.4% in October, with a 15.3 plunge in gasoline prices accounting for more than 80% of the decline. Goods prices rose 0.8% in September. Food prices fell 0.2%.