A key measure of inflation, wholesale prices, rose 8 percent in October from a year earlier, according to the latest report from the Bureau of Labor Statistics.
Although it remains a historic high, it was the smallest increase since July last year and significantly better than forecasts. It’s the second inflation report this month to show signs of a cooling in the rising prices that have plagued the economy.
Economists had expected the Producer Price Index, which measures the prices paid for goods and services before they reach consumers, to show an annual increase of 8.3 percent, up from a revised 8.4 percent in September.
On a monthly basis, producer prices rose 0.2%, below expectations and even with the revised 0.2% increase seen in September.
On a year-over-year basis, the core CPI — which excludes food and energy, items whose pricing is more prone to market volatility — was measured at 6.7 percent, down from a revised annual increase of 7.1 percent in September.
On a month-over-month basis, core CPI prices remained flat, the lowest monthly reading since November 2020. In September, the core CPI rose by a revised 0.2% from the previous month.
Economists had expected annual and monthly core CPI to be 7.2% and 0.3%, respectively, according to Refinitiv estimates.
President Joe Biden announced the October PPI report on Tuesday, calling it “more good news for our economy this morning and more evidence that we’re 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 also moderated,” Biden wrote Tuesday. “And, today’s report also showed that food inflation slowed – a welcome sign for family grocery bills as we head into the holidays.”
For much of this year, the Federal Reserve has sought to reduce decades of 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 at LPL Financial.
Costs related to transportation and storage, for example, fell for the fourth month in a row, a likely result of the improving global shipping climate, he said. Production costs for new cars fell more than in May 2017, he added.
“Barring geopolitical or financial crises, inflation should continue to decelerate through 2023,” it said in a statement.
Since the PPI captures price changes that occur further up, the report is seen by some as a leading indicator of broader inflationary trends and a predictor of what consumers will eventually see at the store level.
“The PPI reading certainly adds more fuel to the fire for those who think we may finally be in a bearish inflation trend,” said Mike Loewengart, head of model portfolio construction at Morgan Stanley.
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 President Lael Brainard said on Monday, signaling that rate hikes appear to be on the cards and if economic data continues to point to falling inflation, then the central bank could cut area. of future interest rate increases.
“When you look at the inflation numbers, there are some signs that we’ve peaked, but are we coming down fast?” Steven Ricchiuto, chief economist at Mizuho Americas told CNN Business.
Ricchiuto noted that October’s figures are only a few steps lower than what we saw in September.
“These are not the things that tell the Fed to stop pushing interest 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.
title: “Core Inflation Report Shows Fed S Rate Hikes May Start To Cut Prices "
ShowToc: true
date: “2022-12-24”
author: “Abel Stone”
A key measure of inflation, wholesale prices, rose 8 percent in October from a year earlier, according to the latest report from the Bureau of Labor Statistics.
Although it remains a historic high, it was the smallest increase since July last year and significantly better than forecasts. It’s the second inflation report this month to show signs of a cooling in the rising prices that have plagued the economy.
Economists had expected the Producer Price Index, which measures the prices paid for goods and services before they reach consumers, to show an annual increase of 8.3 percent, up from a revised 8.4 percent in September.
On a monthly basis, producer prices rose 0.2%, below expectations and even with the revised 0.2% increase seen in September.
On a year-over-year basis, the core CPI — which excludes food and energy, items whose pricing is more prone to market volatility — was measured at 6.7 percent, down from a revised annual increase of 7.1 percent in September.
On a month-over-month basis, core CPI prices remained flat, the lowest monthly reading since November 2020. In September, the core CPI rose by a revised 0.2% from the previous month.
Economists had expected annual and monthly core CPI to be 7.2% and 0.3%, respectively, according to Refinitiv estimates.
President Joe Biden announced the October PPI report on Tuesday, calling it “more good news for our economy this morning and more evidence that we’re 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 also moderated,” Biden wrote Tuesday. “And, today’s report also showed that food inflation slowed – a welcome sign for family grocery bills as we head into the holidays.”
For much of this year, the Federal Reserve has sought to reduce decades of 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 at LPL Financial.
Costs related to transportation and storage, for example, fell for the fourth month in a row, a likely result of the improving global shipping climate, he said. Production costs for new cars fell more than in May 2017, he added.
“Barring geopolitical or financial crises, inflation should continue to decelerate through 2023,” it said in a statement.
Since the PPI captures price changes that occur further up, the report is seen by some as a leading indicator of broader inflationary trends and a predictor of what consumers will eventually see at the store level.
“The PPI reading certainly adds more fuel to the fire for those who think we may finally be in a bearish inflation trend,” said Mike Loewengart, head of model portfolio construction at Morgan Stanley.
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 President Lael Brainard said on Monday, signaling that rate hikes appear to be on the cards and if economic data continues to point to falling inflation, then the central bank could cut area. of future interest rate increases.
“When you look at the inflation numbers, there are some signs that we’ve peaked, but are we coming down fast?” Steven Ricchiuto, chief economist at Mizuho Americas told CNN Business.
Ricchiuto noted that October’s figures are only a few steps lower than what we saw in September.
“These are not the things that tell the Fed to stop pushing interest 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.
