Yet another key economic report is showing inflation pressures are easing

Minneapolis(CNN Business) A key measure of inflation, wholesale prices, rose by 8% in October from a year before, according to the latest report from the Bureau of Labor Statistics.

While still historically high, it was the smallest increase since July of last year and significantly better than forecasts. It's the second inflation report this month to show signs of cooling in the rising prices that have plagued the economy.

Economists expected the Producer Price Index, which measures prices paid for goods and services before they reach consumers, to show an annual increase of 8.3%, down from September's revised 8.4%.

On a monthly basis, producer prices rose 0.2%, below expectations and even with the revised 0.2% increase seen in September.

Year-over-year, core PPI — which excludes food and energy, components whose pricing is more prone to market volatility — measured 6.7%, down from September's revised annual increase of 7.1%.

Month-over-month, core PPI prices were flat, the lowest monthly reading since November 2020. In September, core PPI increased by a revised 0.2% from the month before.

Economists had expected annual and monthly core PPI to measure 7.2% and 0.3%, respectively, according to estimates on Refinitiv.

President Joe Biden heralded October's PPI report Tuesday calling it "more good news for our economy this morning, and more indications that we are starting to see inflation moderate."

"Today's news -- that prices paid by businesses moderated last month -- comes a week after news that prices paid by consumers have also moderated," Biden wrote Tuesday. "And, today's report also showed that food inflation slowed -- a welcome sign for family's grocery bills as we head into the holidays."

For much of this year, the Federal Reserve has sought to tamp down decades-high inflation by tightening monetary policy, including issuing an unprecedented four consecutive rate hikes of 75 basis points, or three-quarters of a percentage point.

The better-than-expected PPI data reflects an economy that has slowed, with supply moving more into balance, said Jeffrey Roach, chief economist for LPL Financial.

Costs associated with transportation and warehousing, for example, declined for the fourth consecutive month, a likely result of the improved global shipping climate, he said. Producer costs for new cars fell the most since May 2017, he added.

"Barring geopolitical or financial crises, inflation should continue its deceleration into 2023," he said in a statement.

Since PPI captures price changes happening further upstream, the report is considered by some to be a leading indicator for broader inflationary trends and a predictor of what consumers will eventually see at the store level.

"The PPI read certainly adds more fuel to the fire for those who feel we may finally be on a downward inflation trend," Mike Loewengart, Morgan Stanley's head of model portfolio construction, said in a statement.

Last week's Consumer Price Index showed inflation slowed to 7.7% from 8.2% year-over-year for consumer goods, surprising investors and giving Wall Street its biggest boost since 2020.

The CPI data was "reassuring," Fed vice chair Lael Brainard said on Monday, signaling that the rate hikes appear to be taking hold, and if the economic data continues to show inflation on the decline, then the central bank could scale back the extent of its future rate hikes.

"When you look at the inflation numbers, there's some evidence that we've peaked, but are we coming down quickly?" Steven Ricchiuto, chief economist for Mizuho Americas told CNN Business.

Ricchiuto noted that the October figures are only a couple steps lower than what was seen in September.

"These aren't the types of things that tell the Fed to stop tightening rates," he said. However, "they may tell you [that] you don't need 75 basis points."

CNN's DJ Judd and Matt Egan contributed to this report.