US Producer Price Index Unchanged on Decline in Gasoline Costs
(Bloomberg) -- A measure of prices paid to US producers was unchanged in September, restrained by declines in gasoline, suggesting further progress toward tamer inflation.
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The producer price index for final demand was flat from August after rising 0.2% in the prior month, according to a Bureau of Labor Statistics report out Friday. From a year ago, it rose 1.8% — the smallest advance since February.
A less-volatile measure favored by many economists for stripping out food, energy and trade edged up 0.1%, matching the smallest advance since no change in May 2023.
The wholesale inflation data follow the more closely watched consumer price index, which showed Thursday that inflation rose a touch more than forecast in September, on the back of higher costs for shelter, food and apparel.
Federal Reserve officials will take both reports into account as they plot out their path for lowering interest rates. Economists parse the PPI data for categories that feed into the Fed’s preferred inflation measure — the personal consumption expenditures price index. Those categories were mixed.
Physician care and hospital outpatient care costs were little changed, while airfares rebounded sharply. A measure of portfolio-management fees accelerated slightly. The September PCE price data is due later this month.
Treasury yields remained higher and stock-index futures fluctuated after the wholesale figures. Traders continue to expect the Fed to lower interest rates a quarter of a percentage point next month.
The Fed kicked off its easing campaign last month with a 50 basis-point reduction after months of cooler inflation and a stretch of moderating payrolls growth. Since then, reports have pointed to stronger job gains and stubborn price pressures, prompting economists to dial back expectations for a November rate reduction to a quarter point.
The PPI report showed services costs increased 0.2%, a deceleration from the 0.4% gain in the prior month. Prices of goods rose 0.2% for a third month when excluding food and energy.
Wholesale prices for food jumped 1%, the most since February, while energy prices dropped 2.7%.
Costs of processed goods for intermediate demand, which reflect prices earlier in the production pipeline, slid 0.8% on a steep decline in diesel fuel.
After slipping to a three-year low earlier last month, commodity prices have rebounded sharply. Oil prices have climbed on geopolitical concerns in the Middle East, while enthusiasm about China’s pro-growth pivot has helped fuel a pickup in metals prices.
--With assistance from Chris Middleton and Liz Capo McCormick.
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