Wholesale Inflation in the US Rises by 2.2% in September

The U.S. Labor Department revealed on October 11 that the Producer Price Index (PPI), a key gauge of wholesale inflation, rose 2.2% year-over-year in September, exceeding economists' expectations.

This marks the fastest pace of increase since April this year and suggests that inflationary pressures aren't weaking, despite a year and a half of elevated interest rates. On a month-to-month basis, the PPI rose 0.5% from August to September, slightly cooling from a 0.7% increase seen in the July/August period.

When excluding the most volatile prices, namely food and energy, core inflation rose 2.7% year-over-year and 0.3% month-over-month in September.

Last year, the U.S. experienced inflation rates not seen in four decades, prompting the Federal Reserve to aggressively raise interest rates. Since March 2022, the central bank has hiked its benchmark rate 11 times, aiming to curb inflation and slow down the job market, which remains robust.

Recent data shows that wholesale prices have been rising at a slower pace compared to consumer prices, fueling optimism that inflation might gradually ease.

However, September's PPI figures indicate that wholesale inflation, primarily driven by an uptick in the price of goods, was higher than anticipated. Economists had projected an annual PPI increase of 1.6% and a monthly uptick of 0.3%, according to Refinitiv consensus estimates.

Amid these developments, there are growing expectations that the Federal Reserve may keep interest rates steady for the remainder of the year. Earlier this week, two Fed officials hinted that the central bank might leave its key rate unchanged in its next meeting, scheduled for three weeks from now. This announcement led to a rally in both bonds and stocks.