Wholesale prices stayed flat in September, underscoring a steady cooling in inflation, the Labor Department reported Friday.
The producer price index (PPI), which tracks what suppliers receive for goods and services, showed no monthly increase and was up 1.8% from the same time last year.
Economists had anticipated a modest 0.1% rise after August’s 0.2% uptick.
When excluding the often-volatile food and energy sectors, the PPI ticked up by 0.2%, matching forecasts, and marked a 2.8% increase over the previous year.
This report follows the Labor Department’s consumer price index (CPI) release, which tracks what consumers pay.
The CPI also saw a 0.2% gain for September, with a 2.4% rise over the year.
Together, these indicators suggest inflation has cooled significantly from its peak more than two years ago, though it remains just above the Federal Reserve’s 2% target.
Markets barely reacted to the data at first. Wall Street futures nudged higher, while longer-term Treasury yields ticked up.
Later in the day, stocks climbed, with the Dow Jones Industrial Average gaining over 300 points, driven by strong bank earnings.
“The latest PPI and CPI figures don’t disrupt the disinflation narrative, but they do remind us we aren’t on a smooth glide slope to 2%,” remarked Oren Klachkin, an economist at Nationwide Financial.
While neither the PPI nor CPI are the Fed’s primary inflation measures, both influence the personal consumption expenditures (PCE) price index, the Fed’s preferred metric.
Economists expect the PCE index, due later this month, to rise by about 0.2%.
On Friday, the University of Michigan’s Survey of Consumers showed sentiment dipping in October, partly due to rising near-term inflation expectations.
The survey’s headline index dropped by 1.7% from September, while one-year inflation expectations hit 2.9%, tied for the highest level since June.
The breakdown of the PPI highlighted mixed results. A 0.2% fall in goods prices, led by energy, offset a 0.2% rise in services.
Notably, diesel fuel prices plunged 17.6%, while gasoline dropped 5.6%. A 3% rise in deposit services costs pushed the services index higher, while professional and commercial equipment wholesaling prices sank 6.3%.
Though inflation appears to be heading in the right direction, sticky prices in areas like shelter, food, and vehicles persist.
Minutes from the Federal Reserve’s September meeting revealed divided opinions on interest rate cuts.
Most officials, however, expect further reductions if data supports them, with markets anticipating a quarter-point cut at each of the Fed’s two remaining meetings this year.
Despite these mixed signals, businesses continue to adapt to the current economic landscape, responding to both inflationary pressures and opportunities for growth.
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