US producer prices rise in October as Bessent and Goolsbee split over whether energy explains inflation

The Bureau of Labor Statistics published its producer price index for October on Friday². US producer prices rose moderately in October, but inflation broadened out¹.

Coverage of the figures differed in emphasis. One account said producer prices hit a four-year high, stoking speculation about a Fed rate rise³. Another described wholesale inflation as having cooled last month⁴. A third reported producer prices rising at a 6.5% annual pace as Fed officials signalled a rate increase⁵.

Coverage of the data quoted a warning that food prices “are going to cause a further upset in consumer sentiment as they rise into the holidays and well into 2027”¹.

Treasury and the Fed disagree

Treasury Secretary Scott Bessent said on Friday that the Federal Reserve should not raise rates because of inflation driven by the energy shock⁶. Bessent and Chicago Fed President Austan Goolsbee are divided on the role of the energy shock in inflation⁶.

Goolsbee said price pressures were building far beyond what could be explained by high oil prices¹⁰. He said inflation has broadened into categories “where prices are not being driven by energy”⁹.

Goolsbee said in a television interview on Friday that the central bank “has definitely got work to do” on inflation⁷. He said the Fed must take more action to bring down inflation and must reestablish its credibility on the issue⁸. “We’ve had some signs of trouble now for several months in a row,” he said⁴.

Why it matters to investors

The split puts the Treasury publicly at odds with a Fed policymaker over the case for further rate increases^6,8. If inflation is mainly an energy shock, as Bessent argues, it could fade as oil prices ease; if it has broadened, as Goolsbee says, he argues the Fed must act further^8,9.

Fed officials have been signalling a rate increase, and the producer price figures add to the data they are weighing^3,5.

Fed Governor Michelle Bowman also commented on inflation this week, and the central bank considers core PCE the most telling data point for inflation⁵. That means the producer price data feed into the measure the Fed watches most closely, rather than standing alone^2,5.

What to watch

Further comments from Fed officials before their next meeting will show whether Goolsbee’s view of broadening inflation is shared^5,7. Any further statement from the Treasury on Fed policy would also indicate whether the administration intends to press its case⁶.