The latest measure of inflation, which measures wholesale prices, was found to have risen more than expected in September, indicating continued inflationary pressures on the US economy.
The producer price index, which measures the cost of finished goods paid by manufacturers, rose 0.5% for the month, compared with Dow Jones estimates for a 0.3% increase, according to a Labor Report on Wednesday. The data was less than a 0.7% increase in August.
Excluding food and energy, core PPI rose by 0.3%, compared to estimates of 0.2%. Excluding food, energy and services trade, the index rose 0.2%, in line with estimates.
Inflationary pressure was mainly driven by final demand goods, which rose by 0.9% in the month, while services increased by 0.3%.
On a year-on-year basis, core PPI rose by 2.2%, the biggest move since April.
The market sees the PPI as a key indicator for inflation, as it measures various costs for items in the pipeline that are used in consumer products. On Thursday, the Labor Department will publish the consumer price index of more concern, where it is expected to show a slight decrease in the inflation rate.
Both of these reports provide input into policy decisions from the Federal Reserve, which has aggressively raised interest rates in an effort to control inflation.
In recent days, central bank officials have indicated they may not need to make additional hikes as US bond yields have risen sharply, tightening financial conditions. This in turn has helped ease market anxiety, lifting stocks higher this week.
Markets reacted little to this PPI release, with stock futures slightly lower and bond yields marginally lower although still negative on most longer-dated issues.
