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Will US retail sales and producer price index (PPI) decline? | US Economy | Producer Price Index | US Retail Sales

[Великая Эпоха, 16 ноября 2023 г.](Detailed reporting by Epoch Times reporter Lee Yang) United States in Octoberproducer price index(PPI) fell unexpectedly, the biggest decline in three and a half years,inflationThe latest sign of easing pressure was a drop in retail sales in October compared with the previous month. This could further strengthenfedThe end of expectations for higher interest rates.

Data released by the US Bureau of Labor Statistics on Wednesday (Nov. 15) showed that the producer price index fell 0.5% in October compared with September, the biggest decline since April 2020. The producer price index rose 0.4% in September.

Compared to the same period last year, the headline producer price index increased 1.3% year on year, up from 2.2% in September. Excluding food and energy volatility, the core U.S. producer price index was unchanged in October from the previous month and also slowed significantly from 2.7% in September to 2.4% year over year. It was expected to increase by 2.7% year on year. The core producer price index, which excludes food, energy and trade services, rose slightly at 0.1%, also below expectations for a 0.3% increase.

The main reason for the decline in the producer price index in October was the fall in energy prices.

Data from the Labor Department showed that the decline in prices was mainly due to commodities. Among them, more than 80% of the decline in raw material prices was due to the decline in the cost of gasoline, with gasoline prices falling by 15.3%. Meanwhile, service costs remained flat after rising for six months in a row.

Earlier data released by the Labor Department on Tuesday showed that the consumer price index (CPI) in October was almost the same as in September.Measurement CoreinflationKey indicators unexpectedly slowed. This caused a reaction in the stock market, prompting traders to cut rates.fedBets on further interest rate hikes.

However, although both the Consumer Price Index and Producer Price Index fell in October, they were still above the 2% target set by the Federal Reserve.

At the same time, the US Commerce Department also released a report on retail sales for October on Wednesday. (adjusted for inflation), it fell for the first time since March. The market expected a fall of 0.2%. Sales excluding autos rose 0.1%, while market expectations remained unchanged.

Although retail sales fell less than expected, this indicates a slowdown in demand. Cooling inflation and slowing employment and wage growth have heightened market expectations that the Federal Reserve’s cycle of interest rate hikes has come to an end.

Financial markets are even expecting the Fed to cut interest rates next May, according to the CME group’s FedWatch tool. Effective March 2022, the Federal Reserve raised interest rates by 525 basis points to the current range of 5.25% to 5.50%.

The release of October CPI and PPI data led the market to bet that the Fed’s current cycle of interest rate hikes may have ended.

Bank of America predicted the Federal Reserve will raise interest rates for the last time by 25 basis points in December. But after two major Labor Department reports this week, the bank retreated from that view and concluded that the current cycle of rate hikes is over. The Federal Reserve is expected to begin cutting interest rates next June and will cut interest rates once every quarter.

James Knightley, chief international economist at ING Financial Markets, said in a note that Wednesday’s report “shows easing price pressures and resilient activity, providing support for (the economy).”

Responsible Editor: Li Lin#

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