The numbers: U.S. market prices stayed the same in September, which showed that inflation was low in the economy. This means that last month’s bigger-than-expected rise in consumer prices is not likely to last.
According to a study by the Wall Street Journal, economists thought the rate would go up by 0.1%.
When compared to what people paid for goods and services last month, wholesale prices were not very high.
The consumer price index went up more than expected, which made people wonder if the Federal Reserve would go through with its plan to lower interest rates in November.
But based on how inflation is going now, most experts say the Fed won’t change its plan.
The PPI seems to show that inflation is still steady and at a pretty low level. Government data showed that wholesale prices only went up 1.8% in the year ending in September.
Also, parts of the trade report are used to figure out the rate of inflation in the PCE price index that the Fed prefers. Based on the data, it looks like the PCE index will rise less than the consumer-price index in September.
The last week of the month is when the PCE measure is released.
Important facts: Food and energy prices are very volatile, but a different measure of market prices called “core” prices rose 0.1% in September.
The core rate for 12 months went from 3.3% to 3.2%.
A small 0.2% rise in service prices was balanced out by a 0.2% drop in the cost of goods last month.
Recently, prices of goods and services have been the main cause of inflation. It’s a little more than the 2.9% rise seen last month, but service prices are up 3.1% in the past year.
In the past year, the prices of goods have gone down 1.1%.
Goods that are only half finished cost 0.8% less at wholesale. Prices for raw materials fell 3.2%.
These two measures both show that inflation is not very high in the economy as a whole.
The PPI report shows how much businesses spend on goods. Prices for goods and services often go up or down based on these costs, which can help you tell if inflation is rising.
Big picture: The rate of inflation has dropped close enough to the Federal Reserve’s goal of 2% to make them start to lower interest rates.
The Fed is likely to keep making cuts, but when and how much they cut will rest on how much inflation slows down and whether the unemployment rate keeps going up. The Fed is now more worried about the health of the job market than about inflation.
In the future: In a note to clients, senior U.S. economist Matthew Martin said, “Producer prices came in below expectations and provide support for a 25 basis-point rate cut in November.”