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Business News/ Economy / US October wholesale prices fall to 0.5% in biggest monthly drop since April 2020
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US October wholesale prices fall to 0.5% in biggest monthly drop since April 2020

The US producer price index (PPI), which measures final-demand costs for businesses, declined 0.5 per cent for the month, against analysts' expectations for a 0.1 per cent increase.

Grocery shopping in Rosemead, California File (Photo by Frederic J. BROWN / AFP) (AFP)Premium
Grocery shopping in Rosemead, California File (Photo by Frederic J. BROWN / AFP) (AFP)

Wholesale prices in US fell 0.5 per cent in October, recording their biggest monthly drop since April 2020, according to official data released by the US Labour Department on Wednesday, November 15. 

The US producer price index (PPI), which measures final-demand costs for businesses, declined 0.5 per cent for the month, against analysts' expectations for a 0.1 per cent increase from the Dow Jones consensus. According to the data, the core PPI increased 0.1 per cent - excluding food, energy and trade services.

Also Read: Impact of US inflation data on stock markets, here are 5 things to watch out for in near-term

Additionally, US consumer prices were unchanged in October as Americans paid less for gasoline, and the annual rise in underlying inflation was the smallest in two years, bolstering the view that the Federal Reserve was probably done raising interest rates.

Though rents continued to rise last month, the pace of the increase slowed considerably from September. The softer-than-expected inflation readings reported by the Labor Department on Tuesday pushed US Treasury yields lower and sparked a stock market rally.

The US economy has remained resilient this year despite concerted efforts by the US Federal Reserve to tackle high inflation through interest rate hikes. Economic growth in the third quarter was "boosted by a surge in consumer spending," the Fed announced in its recent interest rate decision.

Food prices gained 0.3 per cent after climbing 0.2 per cent in each of the prior three months. Grocery food prices increased 0.3 per cent, driven by higher costs for meat, fish and eggs. Cereals and bakery products also cost more, while fruit and vegetable prices were unchanged.

“The surprisingly cool CPI solidifies our expectations that the Federal Reserve is done with hiking rates this year and will hold them steady in December. However, we believe there will be a sustained period of slower progress than we’ve seen up to this point against inflation in the flight to get it back to the 2 per cent target. The process is going to be more gradual moving forward,'' said Nigel Green, CEO, deVere Group

“Therefore, we except one more hike from the Fed next year to boost that progress a little. We’re about to see a year-end rally, which investors would not want to miss out on as markets turn bullish on the Fed likely holding rates steady,'' added Green.

 

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Published: 15 Nov 2023, 07:35 PM IST
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