US producer prices are rising less rapidly than in the previous year

US producer prices are rising less rapidly than in the previous year

Battery factory in Alabama

The less rapid increase in producer prices fuels hopes that inflation will subside.

(Photo: dpa)

Washington US manufacturers are no longer raising their prices quite as much as they have been in the past, raising hopes that inflation will subside. Producer prices rose by 8.5 percent in September compared to the same month last year, the Ministry of Labor announced on Wednesday. Economists polled by Reuters had expected growth of just 8.4 percent, down from an 8.7 percent increase in August. At the same time, producer prices rose by 0.4 percent month-on-month in September, twice as much as expected. In August there was a decline of a revised 0.2 percent.

In the statistics, the prices are listed from the factory gate – i.e. before the products are further processed or traded. They provide early signals for the development of consumer prices. These recently rose by 8.3 percent. Experts polled by Reuters expect the inflation rate for September to come in at 8.1 percent on Thursday.

The Fed’s stability target of 2.0 percent would therefore still be a long way off. The Fed is driving interest rates up in unusually large increments because of rampant inflation. It has already raised the interest rate level by three quarters of a percentage point three times in a row – most recently to the range of 3.00 to 3.25 percent. A fourth major step is expected on the financial markets in November.

More: IMF fears domino effects on global financial markets

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