US Producer Price Index Up 8.0% in October... Has Inflation Peaked?

On the 3rd (local time), a customer is selecting products at a grocery store in Washington DC, USA. [Image source=EPA Yonhap News]

[Asia Economy Reporter Kim Daehyun] Last month, U.S. inflation indicators showed slightly lower results than expected, raising hopes that inflationary pressures in the U.S. have eased.

On the 15th (local time), the U.S. Department of Labor announced that the Producer Price Index (PPI) for October rose 8.0% year-on-year, below the market forecast of 8.3%. After peaking at 11.3% in June, the PPI recorded 9.8% in July, 8.7% in August, and 8.4% in September, continuing a four-month slowdown. The month-on-month increase in the October PPI was 0.2%, also below the market expectation of 0.4%.

The core PPI, which excludes energy and food, rose 0.2% month-on-month and 5.4% year-on-year.

The wholesale price index, PPI, is generally considered a leading indicator of inflation. The recently released October Consumer Price Index (CPI) also rose 7.7%, below the market forecast of 7.9%. Accordingly, the theory of an 'inflation peak' is expected to gain more support.

If the inflation rate continues to slow next month, the U.S. Federal Reserve (Fed) may reduce the size of its benchmark interest rate hike from 0.75 percentage points to 0.5 percentage points.