US wholesale worth rise picks up slightly in sign that some pressures remain elevated
WASHINGTON — Wholesale prices in the United States rose last month, remaining low but suggesting that the American economy has yet to completely vanquish inflationary pressure.
Thursday’s update from the Labor Department showed that its producer worth index — which tracks worth rise before it hits consumers — rose 0.2% from September to October, up from a 0.1% boost the month before. Compared with a year earlier, wholesale prices were up 2.4%, accelerating from a year-over-year boost of 1.9% in September.
A 0.3% boost in services prices drove the October boost. Wholesale goods prices edged up 0.1% after falling the previous two months. Excluding food and vigor prices, which tend to bounce around from month to month, so-called core wholesale prices rose 0.3 from September and 3.1% from a year earlier. The readings were about what economists had expected.
Since peaking in mid-2022, worth rise has fallen more or less steadily. But average prices are still nearly 20% higher than they were three years ago — a persistent source of community exasperation that led to Donald Trump’s loss of Vice President Kamala Harris in last week’s presidential election and the gain of Senate control to Republicans.
The October update on producer prices comes a day after the Labor Department reported that buyer prices rose 2.6% last month from a year earlier, a sign that worth rise at the buyer level might be leveling off after having slowed in September to its slowest pace since 2021. Most economists, though, declare they ponder worth rise will eventually resume its slowdown.
worth rise has been moving toward the Federal safety net’s 2% year-over-year target, and the central lender’s worth rise fighters have been satisfied enough with the advancement to cut their point of reference gain rate twice since September — a reversal in policy after they raised rates 11 times in 2022 and 2023.
Trump’s election win has raised doubts about the upcoming path of worth rise and whether the Fed will continue to cut rates. In September, the Fed all but declared win over worth rise and slashed its point of reference gain rate by an unusually steep half-percentage point, its first rate cut since March 2020, when the pandemic was hammering the economy. Last week, the central lender announced a second rate cut, a more typical quarter-point reduction.
Though Trump has vowed to force prices down, in part by encouraging oil and gas drilling, some of his other campaign vows — to impose massive taxes on imports and to deport millions of immigrants working illegally in the United States — are seen as inflationary by mainstream economists. Still, Wall Street traders view an 82% likelihood of a third rate cut when the Fed next meets in December, according to the CME FedWatch tool.
The producer worth index released Thursday can propose an early look at where buyer worth rise might be headed. Economists also watch it because some of its components, notably healthcare and budgetary services, flow into the Fed’s preferred worth rise gauge — the personal consumption expenditures, or PCE, index.
Stephen Brown at fund Economics wrote in a commentary that higher wholesale airfares, fund fees and healthcare prices in October would push core PCE prices higher than the Fed would like to view. But he said the boost wouldn’t be enough “to justify a pause (in rate cuts) by the Fed at its next conference in December.″
worth rise began surging in 2021 as the economy accelerated with surprising speed out of the pandemic downturn, causing severe shortages of goods and labor. The Fed raised its point of reference gain rate 11 times in 2022 and 2023 to a 23-year high. The resulting much higher borrowing costs were expected to tip the United States into downturn. It didn’t happen. The economy kept growing, and employers kept hiring. And, for the most part, worth rise has kept slowing.
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