US Wholesale Inflation Hits 5.4% as Oil Prices Spike
Producer prices rose 0.4% in August, with energy costs driving the increase. Brent crude settled above $105 per barrel. Markets price in a Federal Reserve rate hike for October. GN markets/inflation (en-US) highlights four defensive consumer staples stocks.
The producer price index rose 0.4% in August. This followed a revised 0.1% gain in July. The year-over-year increase reached 5.4%. This marks a significant jump from the 4.8% recorded in the previous month.
Energy costs drove most of this inflation. Diesel prices surged 24.1% in a single month. This accounted for more than one-third of the total rise in producer goods. Brent crude settled above $105 per barrel on Thursday.
Energy Costs Drive Inflation
Oil prices had eased for two months before this spike. Middle East tensions have reversed that trend. The Labor Department reported the data on Thursday. The 4.2% month-over-month jump in energy costs was the primary driver.
Federal Reserve Policy Expectations
The Federal Reserve held rates steady through last year. Markets now price in a quarter-point hike for October. This move would further increase borrowing costs. The central bank tracks the PPI to gauge its 2% inflation target.
Consumer price index readings are expected to climb. Volatility has persisted through August and September. Investors remain cautious as neither the US nor Iran shows signs of negotiation. GN markets/inflation (en-US) notes the rising probability of tighter monetary policy.
Defensive Consumer Staples Picks
Investors are turning to defensive sectors. GN markets/inflation (en-US) recommends four consumer staples stocks. Darling Ingredients Inc. expects earnings growth of over 100% this year. Dole plc and The Vita Coco Company are also included in the list.
Darling Ingredients serves pharmaceutical and food markets. Its consensus earnings estimate improved 55.1% over 60 days. The Zacks Rank for DAR is #2, indicating a buy signal. The Chefs' Warehouse rounds out the recommended group.
