Last month, United States producer prices unexpectedly rose as higher costs for food and services had actually beat the slump in energy costs. According to the U.S. Department of Labor, the producer-price index (PPI) had risen 0.2 percent.
Wholesale prices omitting energy and food increased 0.4 percent. Service costs inched 0.5 percent higher because of the highest margins garnered by retailers of fuel since the spring of 2010. At gas stations and other retail fuel vendors alone, margins jumped 26.1 percent, which means gas prices are falling faster than the wholesale cost of products.
Meanwhile, producer prices increased 1.5 percent in the year ending in October, the smallest gain in eight months and a suggestion that the lack of growth in global markets are containing inflation.
The U.S. experienced the influx of new motor vehicle models, something that analysts say could have been the reason for the unexpected spike in prices received by American factories, farms and refineries. Prices for passenger vehicles garnered a one percent boost, the biggest increase in five years.
Despite the PPI increase, many aver that there is no real sign of inflationary pressures. This means that this could allow Federal Reserve Chair Janet Yellen to postpone any potential interest rate hikes, which many economists believed would take place in the middle of next year.
“The upside surprise is pretty much entirely in one component of services, and it’s correcting from a below-trend number in September,” said David Sloan, senior economist at 4Cast Inc., in an interview with Bloomberg News. “The picture’s pretty subdued — there’s no real sign of inflationary pressure.”
Paul Dales, Senior U.S. Economist at Capital Economics, told RTT News that the core PPI inflation is facing “upward pressure” over the course of the next year.
The U.S. central bank often views core prices to produce a long-term picture of inflation because it often negates volatile food and energy.
