Wholesale inflation increased by only 0.2% in October, exactly as Wall Street had forecasted, new figures from the Producer Price Index indicate, the Federal Reserve’s measure of inflation at the wholesale level. It reflects the prices producers receive for goods and services. But while wholesale inflation remains above the 2% target set by the Fed, it is receiving little upward push. Data from the Bureau of Labor Statistics on Friday said the gain last month followed a minuscule 0.1% September increase.
On an annual basis, the PPI printed at 2.4%, reflecting still gradual ebbing of inflationary pressures. The core PPI which eliminated food and energy categories where prices tend to rise or fall significantly printed at +0.3% in October, just above 0.2% recorded in September. On a yearly basis, however, the core PPI grew 3.1%, suggesting that although underlying inflation is already quite steep, it is not intensifying.
The October PPI gained entirely due to a 0.3 percent increase in services, which accounted for the major part of the monthly increase. Within services, a significant 3.6% jump in portfolio management prices played a key role. Compared with the previous month, food prices declined 0.2% and energy prices were down 0.3%, both of which seem to be softening in those categories. Prices for goods rose a mild 0.1%, ending the downward streak that had been logged in each of the previous two months.
Although wholesale inflation picked up a bit, market expectations indicate that the Federal Reserve might keep its accommodative stance going, as the Fed has a 76.1% chance of a quarter-point rate cut at its December meeting, CME Group’s FedWatch tool estimates.
Related economic news saw the Labor Department report a continued slowdown in layoffs, with initial claims for unemployment benefits falling to 217,000 in the week ending November 9, just below consensus estimates. Continuing claims totaled 1.873 million, further suggesting resilience in the labor market.
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