A measure of wholesale prices showed no change in September, suggesting continued moderation in inflation, the Labor Department reported Friday.
The producer price index, which measures what producers receive for their goods and services, remained unchanged for the month and rose 1.8% from a year earlier. Economists polled by Dow Jones had expected a monthly rise of 0.1%, following a 0.2% rise in August.
Excluding food and energy, the producer price index rose 0.2%, meeting expectations. It rose by 2.8% compared to the previous year.
The report comes a day after the Labor Department reported that the Consumer Price Index, a more widely used measure of inflation that shows what consumers actually pay for goods and services, fell 0.2% in the month and 2.4% from a year earlier. has increased.
Markets had little immediate reaction to the data, with futures on Wall Street trending slightly higher while longer-dated Treasury yields rose. Stock prices rose as the session progressed, with the Dow Jones Industrial Average gaining more than 300 points following strong bank earnings reports.
Taken together, the releases suggest that while inflation is no longer struggling at the breakneck pace that peaked more than two years ago, it is still largely above the Federal Reserve's 2 percent target. Although neither is the Fed's primary inflation indicator, both are included in policymakers' preferred price index for personal consumption expenditures. Following the releases, several economists said they expect the PCE deflator to show an increase of around 0.2% or slightly more for the month it is released at the end of October.
“The latest PPI and CPI data do not disrupt the disinflation narrative and still remind us that we are not on a gentle glide path to 2%,” said Oren Klachkin, market economist at Nationwide Financial.
Separately, the University of Michigan consumer survey showed Friday that sentiment fell in October as near-term inflation expectations rose. The survey's main sentiment index fell 1.7% from September, while one-year inflation expectations rose to 2.9%, the highest since June.
Within the PPI, a 0.2% fall in final demand goods prices offset a 0.2% rise in services. Excluding trading services in the core PPI, the index rose 0.1%.
A 3% increase in deposit costs lifted the services index, while wholesale prices for professional and commercial equipment fell 6.3%.
On the goods side, the 2.7% decline in final energy demand was the main reason for the decline. Likewise, the gasoline index fell 5.6%, curbing gains in the goods index. Diesel fuel prices fell 17.6%.
Fed officials have expressed confidence in recent days that inflation is back to target, even as some aspects, such as the cost of housing, food and vehicles, have remained stubbornly higher. Minutes from the central bank's September meeting showed that policymakers were divided over the decision to cut the Fed's key interest rate by half a percentage point.
Most officials expect the cuts to continue for as long as the data suggests. Markets expect the Fed to cut interest rates by a quarter of a percentage point at each of its two remaining meetings this year.
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