US Producer Price Index Slows More Than Expected as Inflationary Pressures Ease – Bloomberg

The US Producer Price Index (PPI) growth slowed year-on-year in October more than expected. There are new signs that inflationary pressures are beginning to ease.

Key Point
  • US PPI rises 8% year on year, the slowest growth in more than a year
    • The market median estimate was up 8.3%
      • Revised to a rise of 8.4% in September (preliminary rise of 8.5%)
    • Up 0.2% m/mo vs market expectations up 0.4%
      • Revised to a 0.2% rise in September (preliminary rise of 0.4%)
  • Core PPI, excluding food and energy, rose 6.7% year-on-year, up 7.2% from market expectations
    • Revised to a 7.1% rise in September (preliminary rise of 7.2%)
    • No change m/m – +0.3% expected
      • Revised to increase 0.2% in September (preliminary figure up 0.3%)

Overall PPI (line graph), Core PPI (bar graph)

Source: US Bureau of Labor Statistics

October’s consumer price index (CPI) last week also showed weaker-than-expected growth, seen by markets as a positive sign that the pace of rapid inflation is finally beginning to slow.

US CPI, headline and core CPI growth lower than expected – room to slow rate hikes (3)

US Composite PPI peaked at 11.7% year-on-year in March, but growth slowed. Improvements in supply chains, slowing demand and a reduction in prices for many goods are behind this. Commodity prices fell in October, excluding food and energy. Service prices fell negative for the first time since 2020.

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Bloomberg TV report on PPI

Source: Bloomberg

Markets expect the Fed to slow the pace of its rate hikes soon as it watches inflation data closely. But officials have not stopped fighting inflation.

Until now, many companies have passed on the majority of their input and labor costs to consumers, but recently some companies have shown a reluctance to raise prices more aggressively against a backdrop of economic uncertainty.

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