Persistent US services inflation dampens oil outlook

U.S. service-sector businesses returned to steady expansion in the third quarter after a brief and scarcely perceptible slowdown in the second quarter, according to business surveys.

But the expansion is fuelling faster price increases, putting the central bank’s disinflation plan in jeopardy and will likely lead to interest rates remaining higher for longer.

Service-sector prices increased at an annualised rate of 5.2% over the three months ending in September, up from 3.3% in the three months ending in June.

The acceleration in service-sector price increases was broadly based and similar whether housing rents are included or excluded.