U.S. wholesale inflation rose due to higher energy and food prices

Wholesale inflation in the U.S. accelerated in September due to higher energy and food prices, according to the Bureau of Labor Statistics, the producer price index (PPI) rose 0.3% for the month after a 0.1% decline in August, matching economists' expectations, Bloomberg reports

Meanwhile, core PPI, which excludes food and energy, rose 0.1%, the smallest increase in three months and better than analysts' forecasts. On a year-on-year basis, core PPI increased by 2.6%, the lowest rate since July 2024, the agency said.

Commodity prices in the wholesale segment rose 0.9%, with most of the increase - about 60% - driven by higher gasoline prices, the PPI report said. Excluding food and energy, consumer goods showed the weakest growth since March. At the same time, the cost of services remained unchanged after falling a month earlier: margins fell at wholesalers of equipment and machinery, but rose at food suppliers.

Statistics on wholesale prices came out a month after the September consumer price index (CPI), which was weaker than expected, notes Bloomberg. PPI data indicate that companies, fearing to scare off buyers, tried to restrain price increases, despite the growth of import duties and the rise in prices of certain categories of goods, the agency adds.

Economists and investors keep a close eye on PPI because several of its components are part of the Fed's preferred inflation indicator, the Personal Consumption Expenditures (PCE) price index. The Bureau of Economic Analysis (BEA) said it will release PCE data for September along with income and spending statistics on December 5. Due to delays in the statistics amid the U.S. government shutdown, the September PPI and PCE reports will be among the last important inflation signals the Fed will have before its December 9-10 meeting.

"Overall, there are enough signs of weakening in today's reports - both in the strength of the economy and inflation - to support market expectations for another Fed rate cut next month," said BMO Capital Markets economist Sal Guatieri, who was quoted by Bloomberg.

However, there is still no unanimity in the central bank on the need for further rate cuts, with some governors worried about the labor market and inflation still above target, Bloomberg highlighted.

This article was AI-translated and verified by a human editor