The dollar rose across the board after better than expected Producer Price Index data showed an increase to 0.8 percent in September from a flat month in August. Wholesale prices beat expectations of a mere 0.2 percent rise, boosted by gasoline, food and trucks, indicating inflationary pressures continue to spread to the production line.
Year-on-year, PPI rose to 6.9 percent compared to a previous 6.5.
Core CPI which excludes food and energy costs, also rose more than expected to 0.2 percent from 0.1 percent.
PPI measures the change in the price of finished goods and services sold by producers and has more impact when it is released before CPI data because the reports are significantly correlated. PPI is a leading indicator of consumer inflation . When producers charge more for goods and services the higher costs are usually passed on to the consumer. CPI data are due tomorrow.
However, with global growth slowing, there is not cause for alarm that inflation will spiral out of control and the upward trend in prices is not expected to continue. Today China released GDP data which indicated that the world’s second largest economy is slowing down. This added to slowing growth in Europe will help ease price increases and demand of raw material, which should keep inflation in check.
The US dollar jumped against the yen after the data, with USDJPY rising to 76.82 from 76.72 before the news.