US Inflation Shock: Prices Rise Much Sharper Than Expected

US inflation remains more persistent than expected. New figures on producer prices in the United States turned out to be considerably higher than economists had predicted on Thursday afternoon. The sharp rise in energy prices is particularly striking. The figures increase uncertainty about the US central bank's interest rate policy, while stocks and crypto coins are under pressure.

The US Producer Price Index (PPI) rose 1.3 percent in September compared to August. Economists had expected 0.5 to 0.6 percent. On an annual basis, the increase was 6.3 percent, the highest level since the end of 2022. The expectation was between 5.3 and 5.5 percent.

Energy in particular became significantly more expensive, with an increase of 10.8 percent. This is due to the war with Iran and disruptions in the oil market. Even without food and energy, the price pressure remained high. Core PPI increased by 0.7 percent on a monthly basis, against an expected 0.3 percent.

The figures follow Wednesday's US consumer inflation, which was also higher than expected. Consumer prices rose by 0.6 percent on a monthly basis and 3.7 percent on an annual basis in September.

The disappointing figures complicate the interest rate policy of the Federal Reserve (Fed). After the CPI, the estimated chance of an interest rate increase in October was briefly up to 40 to 50 percent. Then it dropped back to about 25 to 35 percent. A reliable new estimate immediately after the PPI publication is not yet available.

On Wall Street, the mood remains cautious. The S&P 500 already closed 1.11 percent lower at 7,718.94 points on Wednesday, after the disappointing CPI figures. On Thursday, futures were about 0.3 to 0.4 percent lower and especially technology stocks remained under pressure.

The turmoil was also visible on the bond market. The US ten-year interest rate fell to around 5.05 to 5.09 percent, while the two-year interest rate was around 4.73 to 4.76 percent. The declines are mainly related to the selling pressure on technology stocks and investors' flight to safer investments, not just the PPI figures.

The PPI figures appeared on Thursday at 2.30 pm Dutch time. Immediately afterwards, Bitcoin (BTC) and Ethereum (ETH) lost ground. The Bitcoin price fell from about $81,000 just before publication to $80,608 at 2:55 pm.

The Ethereum price fell in the same period from about 2,370 dollars to 2,352 dollars. The movements coincided with the announcement, but the charts do not prove that inflation rates were the only cause.