The Labor Department reported that the producer price index (PPI) showed no change in September, indicating a continued easing in inflation. The PPI measures what producers receive for their goods and services and was up 1.8% from a year ago. Economists had expected a monthly gain of 0.1% after a 0.2% increase in August. Excluding food and energy, the PPI rose 0.2%, meeting expectations. This data comes after the consumer price index (CPI), which measures what consumers pay for goods and services, increased by 0.2% for the month and 2.4% from a year ago.
Despite the PPI data, markets showed little reaction, with stock market futures pointing slightly higher and Treasury yields rising on longer-duration securities. The releases suggest that inflation is moderating from its peak over two years ago but remains above the Federal Reserve’s 2% target. Within the PPI, services rose by 0.2%, primarily driven by a 3% increase in deposit services costs, while professional and commercial equipment wholesaling prices fell by 6.3%. On the goods side, a 2.7% decline in energy prices, including a 5.6% drop in gasoline prices and a 17.6% plunge in diesel fuel prices, offset gains in the index.
Federal Reserve officials have expressed confidence in inflation returning to target, despite some categories like shelter, food, and vehicle costs remaining elevated. Minutes from the September meeting showed policymakers were divided over the decision to cut the benchmark interest rate by half a percentage point. Most officials expect further rate cuts as long as data supports it, and markets anticipate a quarter percentage point cut at each of the remaining meetings this year. Overall, the data suggests that inflation is gradually stabilizing, though some key sectors are experiencing higher prices.
