WASHINGTON: US wholesale prices rose by more than expected in August as demand for energy surged, the government reported Thursday.
The bigger-than-expected rise in the producer price index (PPI) highlighted the impact of the recent rise in energy prices on both consumers and producers.
On Wednesday, headline consumer inflation also rose, fueled by rising energy costs.
Wholesale prices rose by 0.7 percent in August, building on a revised 0.4 percent increase a month earlier, according to data from the Labor Department.
US consumer inflation ticks up in August to 3.7%
This was higher than the median forecast of economists surveyed by MarketWatch.
The recent rise in producer and consumer inflation figures is likely to add pressure on the US Federal Reserve’s rate-setting committee, the Federal Open Market Committee (FOMC), which meets to set its key lending rate next week.
The FOMC has voted through 11 interest rate hikes over the last 18 months to tackle high inflation, bringing it down sharply.
However, it remains above the Fed’s long-run target of two percent, with recent energy-fueled increases moving it further away from that objective.
Nevertheless, analysts and traders broadly expect the FOMC to hold rates steady this time around.
“The latest inflation data are not likely to change the outcome of the upcoming FOMC meeting, with Fed officials set to hold policy steady next week,” High Frequency Economics chief US economist Rubeela Farooqi wrote in a note to clients Thursday.
“The subsequent rate path is less certain and will depend on incoming data,” she added.
Much of the increase in August PPI is attributable to a 2.0 percent rise in final demand goods, according to Labor Department data, with the primary factor being a 10.5 percent jump in energy costs.
Final demand services rose by a more modest 0.2 percent, driven by a 1.1 percent increase in the index for residential real estate services.
Stripping out more volatile demand for food, energy and trade, the so-called core PPI rose by just 0.3 percent, which was in line with recent months and only slightly above expectations.
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