Despite lowering gas costs, August’s headline inflation increased 0.1% month (consensus – fall 0.1%) over month. Core inflation rose 0.6% month on month (0.3 percentage point higher than expected).
Releasing today at 8:30 AM ET, PPI is anticipated to rise to -0.1% from -0.5%.
The US Producer Price Index is a tool for tracking inflation and is used to track price changes for goods and services offered by American businesses.
A change in the PPI will often result in a change in the CPI (with the CPI simply increasing when the PPI is rising and vice versa). The Producer Price Index measures inflationary pressure on businesses, which then pass those costs on to consumers.
The US Producer Price Index is currently at 139.81, up from 127.46 one year ago and down from 140.50 last month. It has changed by -0.50% from the previous month and by 9.69% from the previous year.
Tuesday was really harsh for the stock market. A higher-than-anticipated reading for inflation was reported in the consumer price index data for August, and the severity of it was confirmed by market participants with the worst day for US indexes in over 2 years.
PPI, as often seen, does not have a big immediate effect like the CPI release we witnessed on Tuesday. The long-term implications of this data may be just as important as the CPI, more so for gold and currency investors, because it has the potential to cause future inflation in the pricing of consumer goods, discouraging people from saving and reducing their purchasing power.
After yesterday’s hot ‘Consumer Price Index’ release, gold and currency investors are eagerly waiting for PPI.
If US PPI data disappoints, gold prices may now break upwards after a few months of consolidation in the D1 chart.
On the 1-week chart, gold has been consolidating for nearly two years.
- If the US PPI comes up greater than -0.1%, the USD will likely strengthen against other currencies.
- If the US PPI comes up lower than -0.1%, the USD will likely weaken against other currencies.
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