US September PPI rose 1.3% month-on-month, exceeding expectations and marking the largest increase since March 2022. Economists warn the Federal Reserve may raise interest rates again within two weeks.

Data released by the U.S. Department of Labor on Thursday showed that the Producer Price Index (PPI) rose by 1.3% month-over-month in September, significantly exceeding market expectations of 0.6% and marking the largest monthly increase since March 2022. This pushed the year-over-year PPI increase to 6.3%, a new high since December 2022, with a 20% rise in gasoline prices being a major contributing factor. Excluding food, energy, and trade services, core PPI still increased by 0.5%, indicating broad inflationary pressures. Wall Street economists anticipate that the September core Personal Consumption Expenditures (PCE) inflation, to be released later this month, will rise by 0.32% month-over-month, higher than August's 0.25%. Kathy Bostjancic, Chief Economist at Nationwide, warned that despite recent dovish remarks from Federal Reserve officials moderating expectations of continuous rate hikes, there is still a real risk that the Federal Reserve could raise rates again within two weeks. The market currently assigns a 29% probability to a rate hike at the Federal Reserve's meeting at the end of this month, but a 91% probability of at least one rate hike by December.