In October, U.S. market prices went up a bit faster than in September. This suggests that the Federal Reserve may have to keep working hard to bring inflation down to levels that were low before the pandemic.
Top Federal Reserve officials say that the new “bump” in inflation could make it harder for the central bank to cut U.S. interest rates as quickly as Wall Street had hoped a few months ago.
The government said Thursday that the producer price index went up 0.2% last month. Also, wholesale prices went up a little faster in September than was thought before.
In the twelve months that finished in October, wholesale prices went up 2.4%, up from 1.9%, which was the sharpest rise in four months.
There was a bigger 0.3% rise in so-called core market prices last month. These prices don’t include food and energy, but they are thought to be a better indicator of future inflation. The rate for a year went up from 3.3% to 3.5%.
In October, another barometer that measures how much people pay for things and services also went up. The consumer price index showed that the rate of inflation went up from 2.4% to 2.6%. This was the first rise in seven months.
Important facts: The wholesale price of things barely went up last month and hasn’t changed much since last year.
Last month, the prices of wholesale services like transportation and recreation went up by 0.3%. These services are still the largest cause of inflation in the U.S. Prices for services have gone up 3.5% in the last year.
On the inside of the economy, inflation was also a bit higher.
For the first time in three months, the wholesale price of goods that are only half finished went up.
The prices of raw materials also went up by 4.1%, which was the biggest jump in more than two years. The rise was mostly due to energy costs and is not likely to last.
The PPI report shows how much businesses spend on goods. Prices for goods and services often go up or down based on these costs, which can help you tell if inflation is rising.
In the big picture, the Federal Reserve is still fighting the worst inflation since the early 1980s. The Federal Reserve wants to keep inflation at 2% for a long time, but it could take another year or two to get there.
In the future: Oren Klachkin, a financial market economist at Nationwide, said, “A strong economy means that getting to 2% inflation might take longer than the Fed wants.” He said it was likely that the Fed would use “a more gradual pace of easing.”
