A customer shops at a Costco wholesale store in Miami on December 15, 2023.
Joe Radle | Getty Images News | Getty Images
The Bureau of Labor Statistics said Thursday that wholesale prices rose slightly in October, but roughly in line with expectations and in line with the Federal Reserve cutting interest rates again in December.
The producer price index, which measures the amount of money producers earn for their products, rose a seasonally adjusted 0.2% in the month, up a tenth of a point from September but in line with Dow Jones consensus estimates. . On a 12-month basis, headline wholesale inflation was 2.4%.
Core PPI, which excludes food and energy, rose 0.3%, also up a tenth from September and in line with expectations. The 12-month interest rate was 3.1%.
This measure is above the Fed’s 2% inflation target, but trends show that prices are rising more slowly overall and that inflation is being driven up by individual factors.
Services rose 0.3% month-on-month, accounting for most of the PPI increase, and was driven by a 3.6% increase in portfolio management prices. Food prices fell by 0.2% compared to the same month, and energy prices fell by 0.3%. Commodity prices rose 0.1% after falling for the previous two months.
Markets had little reaction to the news, with stock futures suggesting a mixed development while US Treasury yields remained elevated.
Traders expect the Fed to cut rates by another quarter of a point at its Dec. 17-18 meeting, following cuts in September and November. After that, market pricing indicates the Fed will skip January and proceed at a slower pace of easing through 2025.
The market’s probability of a December rate cut fell to 76.1% after the announcement, according to CME Group’s FedWatch futures price gauge, but the area remains a high possibility.
In other economic news Thursday, the Labor Department reported that the pace of layoffs continued to moderate after a brief spike.
There were 217,000 applications for unemployment benefits for the week ending Nov. 9, down 4,000 from the previous quarter and slightly below the expected 220,000.
A total of 1,873,000 applications were filed one week late, a decrease of 11,000 from the previous week.
