The published producer prices for October provide early signals for the development of consumer prices.
(Photo: Reuters)
Washington There are increasing indications that the strong inflation in the USA is abating. After consumer prices, producer prices also did not rise as strongly in October. They increased by 8.0 percent compared to the same month last year, as the Department of Labor announced on Tuesday in Washington.
Economists polled by Reuters had expected 8.3 percent, down from a downwardly revised 8.4 percent in September. The data fueled hopes among stockbrokers that the US Federal Reserve would take it a little slower with the next rate hike.
Dax and EuroStoxx extended their gains early Tuesday afternoon, each up about one percent. The euro also appreciated, trading at $1.0470. Investors, on the other hand, withdrew from the world’s leading currency. The dollar index, which reflects the exchange rate against major currencies, slipped deeper into the red and lost 1.3 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 rose by 7.7 percent in October after the inflation rate had been 8.2 percent in the previous month.
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However, the Fed’s stability target of 2.0 percent is still a long way off. The US monetary authorities are aiming for an inflation rate of 2.0 percent.
The Federal Reserve has been raising interest rates in unusually large increments for months to keep inflation in check. Most recently, she increased it again by three-quarters of a percentage point. It is currently in a range of 3.75 to 4.00 percent.
The Fed is poised to step up but signaled that it would soon slow down some of the pace of tightening moves. “The fact that price pressure eased more than expected last month eases smoldering interest rate concerns on both sides of the Atlantic,” said Emden Research analyst Timo Emden.
Recently, statements by Fed Vice Chair Lael Brainard suggested that the central bank could only raise the key interest rate by half a percentage point in December. In a Bloomberg interview, she called the surprisingly sharp drop in inflation by half a percentage point “reassuring”.
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