In October, wholesale prices indicated a small increment, supporting the likelihood of another interest rate cut by the Federal Reserve in December, according to the Bureau of Labor Statistics.
The producer price index, which represents the price at which producers sell their goods, saw a seasonally adjusted rise of 0.2% during the month, a slight increase from September’s figures. Despite these numbers being higher than the Federal Reserve’s 2% inflation target, trends suggest a general slowdown of price increases.
Major contributions to the PPI were from the services sector, rising 0.3% during the month, led by a substantial 3.6% rise in portfolio management prices. Conversely, food prices declined by 0.2% and energy costs decreased by 0.3%. Goods prices saw a marginal increment of 0.1% after falling for two consecutive months.
Traders are widely expecting another quarter-percentage-point reduction in rates at the Federal Reserve meeting on Dec. 17-18. Subsequent rate cuts, however, appear to be anticipated at a slower pace, extending through 2025. After the report’s release, the implied probability for a December rate cut fell slightly to 76.1%, but remains strongly likely, as tracked by CME Group’s FedWatch.
The Labor Department separately reported a continued easing of layoffs. Initial unemployment benefit claims for the week ending Nov. 9 totaled 217,000, below the estimated 220,000. Meanwhile, ongoing claims fell by 11,000 from the previous week to 1.873 million.
