Inflation pressure continues! US October PPI rises higher than expected, Fed rate cut pace may be affected.

Data released by the US Bureau of Labor Statistics on Thursday showed that the US Producer Price Index (PPI) rose by 2.4% year-on-year in October, higher than the market's expectation of 2.3%; it rose by 0.2% month-on-month, in line with market expectations. In addition, the US core PPI in September rose by 3.1% year-on-year, higher than the market's expectation of 3.0%; it rose by 0.3% month-on-month, higher than the market's expectation of 0.2%. In October, the US producer prices rebounded, partly attributed to the rise in portfolio management and other categories of prices. It is worth noting that these price changes are directly related to the inflation indicators that the Federal Reserve closely monitors. It is worth mentioning that this index follows the Consumer Price Index (CPI) which was released on Wednesday, showing that inflation has remained strong for the third consecutive month. Although price pressures this year have eased overall, the recent lack of further downward trend indicates that the Fed's policymakers may slow down their rate cuts. Economists have delved into the PPI data to find clues to the Personal Consumption Expenditures Price Index (PCE), which is the Fed's preferred inflation indicator. Among them, portfolio management fees, closely related to the stock market, rose by 3.6% to the highest level in six months. Additionally, airline ticket prices showed a significant increase, reaching a new high since late 2022. The report further pointed out that airline ticket prices in the healthcare category showed strong performance. The PPI report also showed that service costs rose by 0.3%, compared to 0.2% in the previous month. At the same time, prices of goods excluding food and energy also saw a slight increase from the previous month, rising by 0.3%. However, the decline in food and energy wholesale prices to some extent restrained the overall increase in the PPI. In conclusion, the increase in US producer prices in October is the result of various factors, including the rise in portfolio management fees, airline ticket prices, and service costs playing a key role. Meanwhile, the decline in food and energy wholesale prices has had a certain inhibitory effect on the overall increase. These price changes not only reflect the current economic situation, but also provide important reference for the Fed's future policy-making.