New figures showed a 0.3 per cent increase last month in "core" producer prices (excluding food and energy. This followed a 0.8 per cent jump in September. The figures sent the 30-year Treasury bond yield up to 6.11 per cent as its price fell half a point, although share prices showed no reaction.
Analysts focused on the bigger-than-expected rise in core prices, even though the headline figure fell by 01 per cent after spiking up by 1.1 per cent the previous month.
The main contributors to the rise were pharmaceutical products and cars. Passenger car prices were up by 1.1 per cent in the month, and light truck prices rose 0.8 per cent.
Car prices also rose strongly in September, when makers introduced new models a month earlier than usual. Not only was the normal end-of-year discounting in that month absent, but there was no decrease in October either. "For the first time in years, car makers think they can pass through price increases," said Christopher Low, an economist at First Tennessee Capital Markets in New York.
However, other analysts said inflationary pressures were benign outside one or two categories. Food, energy and computer prices all fell. Opinions on Wall Street remain evenly divided on the Fed's decision next Tuesday, with evidence of inflationary pressures still sparse despite strong growth.
The Fed's Open Markets Committee raised its target Federal Funds interest rate by a quarter-point in June and again in September. It now stands at 5.25 per cent. Interest rates have risen this month in both the UK and Euroland.
A separate report showed that US jobless claims fell last week, suggesting that the labour market remains strong.
The Labor Department said that first-time unemployment benefits fell by 6,000 to 285,000 from a revised 291,000 in the previous week. This compared to economists' forecasts of figure of 290,000.