PPI Beats Estimates: Producer Prices Jump 2.2%, Keeping Inflation Worries Alive

Price pressures on U.S. producers continue to rise, surpassing expectations.

In September, the Producer Price Index (PPI) increased by 0.5% month-on-month, according to data released Wednesday by the Bureau of Labor Statistics, slowing down from the more robust 0.7% increase observed in August, but exceeding expectations of a 0.3% rise.

On a year-over-year basis, producer prices were 2.2% higher, showing an increase from the 2% annual rate seen in August and sharply surpassing the expected 1.6%.

The core PPI, which excludes energy and food costs, also rose by 0.3% month-on-month, advancing compared to both August’s figures and economist forecasts of 0.2%.

In annual terms, the core PPI advanced to 2.7%, up from the 2.2% recorded in August and above expectations of 2.3%.

Prior the release, financial markets were factoring in a mere 10% likelihood of the Federal Reserve enacting an interest rate hike next month. The higher-than-expected increase in the PPI could potentially raise bets on a Fed rate hike by the end of the year.

Traders are now eagerly awaiting the release of the Federal Open Market Committee minutes on at 2 p.m. ET Wednesday and the crucial Consumer Price Index report due Thursday to assess the most recent inflation trends ahead of the upcoming Fed meeting.

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