Producer Price Index Surges Amid US-Iran War Tensions
The producer price index in the US rose by 0.4% in August, according to data released by the Bureau of Labor Statistics on Thursday.
This increase was driven by higher costs for energy triggered by the ongoing war between the US and Iran, including a surge in domestic airfares and rising costs for hospital care.
Economists expect these price pressures to push up the personal consumption expenditures price index (PCE), which is the Federal Reserve's preferred inflation gauge.
Bank of America economists increased their estimate for August core PCE, excluding food and energy prices, from 0.24% to 0.26%, citing a higher-than-expected increase in producer prices.
The fresh data on producer prices prompted traders to raise the odds of a Fed rate hike next week, with CME Group's FedWatch tool showing a 71.4% probability of a hike compared to 61.2% previously.