Retail Prices Rise 0.2% in October, Meeting Expectations Amid Inflation Rate

Wholesale inflation rose just 0.2% in October, just as Wall Street had predicted, new data from the Producer Price Index showed, the Federal Reserve’s measure of inflation at the wholesale level. It shows the prices producers receive for goods and services. But while wholesale inflation remains above the 2% target set by the Fed, it is picking up slightly. Data from the Bureau of Labor Statistics on Friday said earnings last month followed a slight increase of 0.1% in September.

For the year, the PPI printed at 2.4%, indicating a gradual decrease in inflationary pressure. The core PPI which excluded food and energy categories where prices tend to rise or fall the most was printed at +0.3% in October, just above the 0.2% recorded in September. On an annual basis, however, the core PPI grew by 3.1%, suggesting that while underlying inflation is already on the rise, it is not growing.

October’s PPI benefited entirely from a 0.3 percent increase in services, which accounted for most of the monthly increase. Within services, a significant jump of 3.6% in portfolio management prices played a key role. Compared to the previous month, food prices decreased by 0.2% and electricity prices decreased by 0.3%, both of which appear to be decreasing in those categories. Commodity prices edged up 0.1%, ending the decline posted two months ago.

Although retail inflation picked up slightly, market expectations indicate that the Federal Reserve may keep its accommodative stance on track, as the Fed has a 76.1% chance of a quarterly rate cut at its December meeting, CME Group’s FedWatch tool estimates.

Related economic news saw the Labor Department report a continued decline in layoffs, with initial claims for jobless benefits falling to 217,000 in the week ending Nov. 9, just below consensus estimates. Continued claims reached 1.873 million, and suggest firmness in the labor market.

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