US wholesale inflation rose 2,2% in September - the largest YoY increase since April

U.S. wholesale prices rose last month at the fastest pace since April, suggesting inflationary pressures persist despite a year and a half of higher interest rates. The Labor Department said Wednesday that the producer price index, which measures inflation before it reaches consumers, rose 2,2 percent from a year earlier. This is more than in August, when the increase was 2%.

However, on a monthly basis, producer prices rose only 0,5% from August to September, down from 0,7% from July to August.

After excluding variable food and energy prices, the so-called Core inflation increased by 2,7% in September. compared to the previous year and by 0,3% compared to August. Federal Reserve and many outside economists pay particular attention to core prices as a good signal of where inflation may be heading.

Wholesale prices have risen more slowly than consumer prices, raising hopes that inflation may continue to fall as producer costs are passed on to the consumer. But yesterday's data, driven by rising commodity prices, was higher last month than economists expected.

Wholesale energy prices rose 3,3% from August to September and food prices rose 0,9%, after falling 0,5% from July to August.

Last year, inflation reached the highest level not seen in 40 years

The rise in inflation prompted the Fed to aggressively raise interest rates. Since March 2022, the central bank has raised its reference rate as many as 11 times. These higher borrowing costs have helped cool inflation and slow the still-robust labor market.

As a result, expectations are growing that the Fed may decide to leave interest rates unchanged until the end of the year. On Monday, two Fed officials suggested the central bank might leave its key interest rate unchanged at its next meeting in three weeks, helping to send bond and stock prices higher.

Higher producer prices last month probably don't change the Fed's policy outlook. For the Fed, the development of the geopolitical situation will be an additional risk factor that will probably make policymakers act cautiously in the future.

Meanwhile, the economy remains stronger than expected. There is growing optimism that the Fed can make a soft landing - raising interest rates enough to tame inflation without sending the economy into a deep recession.

Today Department of Labor in the US will release the closely watched consumer price index for September. Last month, the department said that basic consumer prices in...  In August they grew at the slowest pace in almost two years.