Producer price index September 2024:

A measure of wholesale prices showed no change in September, pointing to a continued decline in inflation, the Labor Department reported Friday.

The producer price index, which measures what producers get for their goods and services, remained stable during the month and rose 1.8% from a year earlier. Economists surveyed by Dow Jones expected a 0.1% monthly gain after a 0.2% rise in August.

Excluding food and energy, the PPI rose 0.2%, meeting expectations, and 2.8% higher than a year ago.

The report comes a day after the Labor Department reported that the consumer price index, a more widely followed measure of inflation that shows what consumers actually pay for goods and services, rose 0.2% in the month and 2.4% compared to the previous year.

Markets showed little immediate reaction to the data, with futures pointing slightly higher on Wall Street, while Treasury yields rose on longer duration securities. Stocks rose later in the session, with the Dow Jones Industrial Average adding more than 300 points following strong bank earnings reports.

Taken together, the releases indicate that inflation has stopped reaching the breakneck pace that peaked more than two years ago, but that it still remains largely above the Federal Reserve’s 2% target. While neither is the Fed’s primary indicator of inflation, both influence the personal consumption expenditures price index that policymakers prefer. Following the releases, several economists said they expect the PCE deflator to show an increase of around 0.2% or slightly more over the month when it is released in late October.

“The latest PPI and CPI data do not disrupt the disinflation narrative, and yet they remind us that we are not on a gentle slope toward 2%,” said Oren Klachkin, markets economist at Nationwide Financial.

Separately, on Friday, the University of Michigan Consumer Survey showed that confidence fell in October as near-term inflation expectations rose. The survey’s overall sentiment index fell 1.7% from September, while one-year inflation expectations rose to 2.9%, the highest level since June.

Within the PPI, a 0.2% drop in the prices of final demand goods offset a 0.2% increase in services. Excluding business services from the core PPI, the index rose 0.1%.

A 3% increase in warehouse services costs drove the services index higher, while wholesale prices for professional and commercial equipment fell 6.3%.

On the goods side, a 2.7% drop in final energy demand was the main factor in the decline. Similarly, the gasoline index fell 5.6%, halting gains in the goods index. Diesel fuel prices fell 17.6%.

In recent days, Fed officials have expressed confidence that inflation is returning to its target, although some aspects, such as housing, food and vehicle costs, have remained stubbornly higher. Minutes from the central bank’s September meeting indicated that policymakers were divided over the decision to cut the Federal Reserve’s benchmark interest rate by half a percentage point.

Most officials say they expect to continue cutting as long as the data indicates it. Markets expect the Federal Reserve to cut a quarter of a percentage point at each of its two remaining meetings this year.