The Federal Reserve has consistently raised its interest rates – 11 times since March 2022 – in an effort to curb inflation.
If Labor Department statistics released Wednesday are any indication, it doesn’t seem to be working as much as the Fed had hoped.
U.S. wholesale prices rose last month at the fastest pace since April, the Associated Press reported, suggesting that inflationary pressures remain despite the higher interest rates.
The Labor Department said Wednesday its producer price index was up 2.2% from a year earlier. That was up from a 2% rise in August. On a month-to-month basis, producer prices rose 0.5% from August to September, down from 0.7% from July to August.
Taking out food and energy prices, core inflation rose 2.7% in September from a year earlier and 0.3% from August, the AP reported. The Federal Reserve and many outside economists pay particular attention to core prices as a good signal of where inflation might be headed.
https://33b0a3f750106f753e84787818bc163f.safeframe.googlesyndication.com/safeframe/1-0-40/html/container.html Wholesale prices have been rising more slowly than consumer prices, raising hopes that inflation may continue to ease as producer costs make their way to the consumer, according to the report. Wednesday’s numbers show that wholesale inflation, driven by an uptick in the price of goods, came in higher last month than economists had expected.
In 2022, inflation was at a four-decade high. Higher borrowing costs have helped cool inflation and slow a still-solid job market.There are growing expectations that the Fed may decide to leave interest rates alone for the rest of the year. On Monday, two Fed officials suggested that the central bank may leave its key rate unchanged at its next meeting in three weeks, helping touch off a rally in bonds and stocks.
In the meantime, the economy has remained sturdier than expected, the AP reported. Optimism is rising that the Fed may pull off a ”soft landing” — raising rates just enough to tame inflation without tipping the economy into a deep recession.
