U.S. Wholesale Inflation Remains Steady in September

11 Oct at 10:40 am

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Wholesale inflation/ producer price index/ U.S. inflation data/ Federal Reserve/ economic policy/ consumer prices/ U.S. economy/ Newslooks/ WASHINGTON/ J. Mansour/ Morning Edition/ U.S. wholesale prices held steady in September, with the producer price index (PPI) showing no change from August levels. This pause in inflationary pressures suggests a gradual return to stability after years of elevated prices.

FILE – A worker operates a machine at the BMW Spartanburg plant in Greer, S.C., on Oct. 19, 2022. (AP Photo/Sean Rayford, File)

U.S. Wholesale Inflation Quick Looks

Flat PPI: The Labor Department’s PPI data showed no increase from August to September.
Year-over-Year Comparison: The index rose 1.8% from last year, slightly down from August’s 1.9%.
Core Inflation Increase: Excluding food and energy, core PPI rose 0.2% month-over-month and 2.8% annually.
Broader Inflation Context: September’s consumer prices increased only 2.4%, close to the Fed’s 2% target.
Political Implications: Slowing inflation could impact economic perceptions in the upcoming election.

U.S. Wholesale Inflation Remains Steady in September

Deep Look

In September, wholesale prices in the United States were unchanged, offering a glimpse of diminishing inflationary pressures and raising hope for long-term price stability. The Labor Department reported Friday that its producer price index (PPI), a key measure of inflation before it impacts consumers, remained flat from August to September. This steadying trend follows a slight 0.2% increase in August, signaling that recent inflation surges may be subsiding. On an annual basis, wholesale prices rose just 1.8%, down from August’s 1.9%, a further indication that inflation is slowing.

Core wholesale prices—which exclude the often-volatile food and energy sectors—showed a slight increase of 0.2% from the prior month and were up 2.8% over the past year. This core inflation figure ticked up slightly from the previous month’s figures, largely due to a modest rise in the price of services, which was offset by a drop in goods prices.

The release of this PPI data follows a government report showing a 2.4% annual increase in consumer prices for September. This marks the smallest year-over-year rise since February 2021, placing consumer inflation close to the Federal Reserve’s 2% target. Although inflation remains significantly lower than the 9.1% peak reached in mid-2022, it still weighs on household budgets and remains a concern in the lead-up to next month’s presidential election.

Slowing inflation trends may be reshaping the political landscape, particularly around economic performance perceptions. Although former President Donald Trump has traditionally held a strong edge on economic issues, Vice President Kamala Harris is now polling evenly with him on economic competence in some surveys. Despite this shift, many voters still express dissatisfaction with the state of the economy, primarily due to price increases that accumulated over the past three years.

Economists closely watch the PPI for early indications of consumer inflation trends. This metric can also provide insights into potential shifts in the personal consumption expenditures (PCE) index, a favored inflation measure for the Fed. Given that elements such as healthcare and financial services within the PPI influence the PCE index, the Fed may find this data encouraging as it gauges the direction of inflation.

Inflation initially surged in 2021 amid a rapid economic recovery from the COVID-19 downturn, which created supply and labor shortages across many sectors. In response, the Fed raised its benchmark interest rate 11 times across 2022 and 2023, bringing rates to a 23-year high. These increased borrowing costs were initially expected to trigger a recession, yet the economy continued to expand, and inflation gradually slowed.

Last month, the Fed effectively declared a victory over inflation, opting to reduce its benchmark rate by an unprecedented half percentage point—the first cut since March 2020, when the pandemic had a pronounced economic impact. Further rate cuts are anticipated, with two expected this year and four more scheduled for 2025.