US producer inflation accelerated to 5.4% in August
In the United States, the producer price index rose by 5.4% year-on-year in August, following an increase of 4.8% in July. The figure exceeded economists’ consensus forecast of 5.3%, Channel NewsAsia reports, citing data from the US Department of Labor.
Rising energy costs
On a monthly basis, the producer price index increased by 0.4%, in line with analysts’ expectations. Energy costs rose by 4.2% over the month, while the cost of diesel fuel jumped by 24.1%.
According to the American Automobile Association AAA, the average price of diesel fuel in the country reached a record $5.98 per gallon this week. A year earlier, the average price was $3.71 per gallon. CNA reported that gasoline and diesel prices in the United States rose after US-Israeli strikes on Iran at the end of February, after which Tehran restricted shipping through the Strait of Hormuz.
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Expectations for the Federal Reserve rate
Government statistics also recorded higher prices for gasoline, jet fuel, heating oil for residential heating, sweets and nuts. Higher diesel prices, as diesel is used in freight transportation and agriculture, increased farmers’ costs during the autumn harvest.
On the same day, the yield on 30-year US Treasury bonds rose to 5.35%, the highest level since 2007. The consumer price index was due to be released on Friday, while a Federal Reserve meeting on the rate was scheduled for the following week. CME Group’s FedWatch tool estimated the probability of a 25-basis-point rate hike at nearly 70%.
