Wholesale inflation in August saw its strongest increase in three months, largely driven by higher energy costs – as the Federal Reserve weighs whether to raise interest rates next week to stem rising prices.
The Producer Price Index jumped 5.4% in August over the past 12 months, up from a 4.7% pace in July and slightly above estimates of a 5.3% pace, the Bureau of Labor Statistics said Thursday. On a monthly basis, it rose 0.4%.
Core PPI – which excludes volatile food and energy prices, making it a better measure for underlying inflation trends – rose to 4.7%, up from 4.2% the previous month and also slightly above expectations of a 4.6% rise.
It’s the first of two major inflation reports this week that could influence the Fed’s decision at its Sept. 16 meeting. All eyes will be on the Consumer Price Index, slated for release Friday morning, as a hotter-than-expected report could push the Fed to hike rates.
Officials have been divided over whether it’s too soon to hike rates, which could stunt growth, or if inflation is hot enough to demand a quarter-point hike.
This is a developing story. Please check back for updates.