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The rather large jump in the PPI will likely lend more support to the Federal Reserve continuing to raise interest rates.
The Bureau of Labor Statistics of the U.S. Department of Labor reported today that the seasonally adjusted Producer Price Index for Finished Goods advanced 1.7 percent in October. This gain followed a 0.1- percent rise in September and a 0.1-percent decrease in August.
The largest change was in energy which increased 6.8% in October.
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How much of this increase is due to the recent drop in the dollar and energy price increases permeating through the economy? In other words is the PPI going to stabilize if these two factors remains stable? The dollar issue is an unpredictable factor. I think the only way it is going to stabilze is if Americans start importing less, and the only way that is going to happen is if the cost of consumption of imports goes up because of taxation, dollar weakness, or shortages.
