Wholesale Inflation Rises as Expected in August, Producer Prices Climb 0.4%
U.S. wholesale inflation advanced largely in line with forecasts in August, according to data released Wednesday by the Bureau of Labor Statistics. The report arrives days before the closely watched Consumer Price Index release and as traders weigh the likelihood of another Federal Reserve rate hike this year.
Monthly Producer Price Gains Accelerate
The headline Producer Price Index (PPI) increased 0.4% in August from the previous month, matching economists’ consensus estimates. The reading marks a notable pickup from July’s revised gain of 0.1%.
The “core” reading — which excludes the more volatile food and energy costs — showed producer prices advanced by 0.2% over the previous month. That came in slightly below the 0.3% growth economists had predicted and below July’s revised gain of 0.3%.
Year-Over-Year Inflation Remains Elevated
On an annual basis, headline producer prices rose 5.4% in August, slightly above the 5.3% estimate and accelerating from the previous month’s revised 4.8% print. Core inflation came in at 4.6%, in line with estimates but above July’s 4.2% increase.
CPI Report Next in Focus for Fed Clues
Today’s wholesale inflation data precedes the monthly Consumer Price Index report due Friday. Market participants will scrutinize the CPI for signals on the Federal Reserve’s policy trajectory.
Economists expect the upcoming CPI data to show that headline consumer prices ticked up month over month but remained flat from a year ago at 3.4%. The “core” CPI — the more closely watched metric — is projected to tick down slightly on a yearly basis to 2.4%.
Rate-Hike Bets Firm After Hawkish Jackson Hole Remarks
Following Fed Chairman Kevin Warsh’s speech last month at the Jackson Hole symposium, where he took a more hawkish stance than expected, market positioning has shifted further toward a 25 basis point rate hike by year-end.
Traders are currently pricing in roughly a 64% chance of a hike at the September meeting next week, while bets for at least one increase by the Fed’s December meeting sit at approximately 90%.
Jake Conley is a breaking news reporter covering U.S. equities for Yahoo Finance. Follow him on X at @byjakeconley or email him at jake.conley@yahooinc.com.
