Is inflation FINALLY slowing? Wholesale prices rise less than expected in another sign inflation is easing: Dow jumps 375 points on hopes Fed will slow interest rate hikes
- US wholesale prices increased less than expected in October, rising 8%
- It marked the fourth straight month the figure has declined
- Stock market rallied on the news, with the Dow rising about 300 points
- President Joe Biden, who has faced criticism over soaring inflation, praised the new data in a statement, calling it 'more good news for our economy'
US wholesale prices increased less than expected in October, in further evidence that inflation is beginning to subside.
The producer price index for final demand, which measures inflation before it reaches consumers, rose eight percent in October from a year ago, marking the fourth straight month the figure has declined, the Labor Department said on Tuesday.
Markets cheered the news, the Dow Jones Industrial Average jumping about 375 points soon after the opening bell and adding gains to its recent rally.
President Joe Biden, who has faced criticism over soaring inflation, praised the new data in a statement, calling it 'more good news for our economy.'
He also said that this an indication 'that we are starting to see inflation moderate.'
The producer price index for final demand, which measures inflation before it reaches consumers, rose 8% in October from a year ago in its fourth straight month of decline
President Joe Biden, who has faced criticism over soaring inflation, praised the new data in a statement, calling it 'more good news for our economy'
The Dow jumped again on Tuesday, adding to the recent rally seen in a five-day view
'The bottom line is this: my economic plan is showing results, and we face global economic challenges from a position of strength,' added Biden.
The new report follows better-than-expected consumer prices data late last week that sparked a massive stock market rally, with investors hoping the Federal Reserve will back off the aggressive rate hikes that have roiled markets this year.
'It (the data) is going to confirm people's hopes that inflation is starting to turn the corner. It's going to give the market more confidence,' said Robert Pavlik, senior portfolio manager at Dakota Wealth in Fairfield, Connecticut.
Tuesday's report also revised the wholesale inflation figures for September downward from their initial estimates.
The revision shows the PPI rose 8.4 percent on the year in September, instead of 8.5 percent as initially reported.
On a monthly basis, the PPI increased 0.2 percent last month, less than the 0.4 percent economists had expected and unchanged from the revised September rate.
Excluding the volatile food, energy and trade services components, producer prices rose 0.2 percent in October from the prior month and 5.4 percent from a year ago.
Wholesale inflation reached a record high of 11.7 percent in March, the most since the figure was first calculated in 2010.
Government data last week showed consumer prices rose less than expected in October, pushing the annual increase below 8 percent for the first time in eight months.
Consumer inflation has been declining from its June peak of 9.1 percent, as higher interest rates dampen demand and supply chains recover.
But with spending shifting back to labor-intensive services and the jobs market still tight, wage pressures could keep inflation painfully high for some time.
The Fed early this month delivered a fourth consecutive 75-basis-point interest rate hike and said its fight to lower inflation to the U.S. central bank's 2 percent target would require borrowing costs to rise further.
However, the Fed signaled it may be nearing an inflection point in what has become the fastest rate hiking cycle since the 1980s.
Traders are now pricing in a 91 percent chance of a 50 basis point rate hike at the Fed's December meeting.
A car production line. The producer price index for final demand measures inflation before it reaches consumers
Annual consumer inflation dropped below 8% last month for the first time in eight months
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