CNN —
Inflation among U.S. producers slowed further in September, raising hopes that prices would not go up before reaching consumers.
The producer price index, which measures average price changes for producers and manufacturers, rose 1.8% in the year ended September, slowing slightly from the 1.9% rise in August, according to Bureau of Labor Statistics data released Friday. did.
FactSet estimates show the annual rate is moving faster than the 1.6% increase expected by economists. However, prices continued to fall in September as August’s interest rate was revised upward from the originally expected 1.7%.
Prices were flat during the month as falling energy prices offset a 1% rise in food prices (the highest since February), resulting in deflation across goods. Services rose 0.2%, according to BLS data.
Core PPI, which excludes the more volatile categories of food and energy, rose 2.8% year-on-year, accelerating from 2.6% in August. On a monthly basis, the core index rose 0.2%.
PPI is important because it is often seen as a harbinger of price increases that consumers will ultimately pay. It is thought that if materials and finished goods become more expensive for manufacturers and producers, the higher prices can be passed on to ordinary Americans, but this is not always the case.
On Thursday, the consumer price index, which measures average price changes for commonly purchased goods and services, fell to 2.4%, its lowest level since February 2021.
U.S. inflation has slowed significantly since peaking in the summer of 2022, with prices rising at an annual pace in line with the Federal Reserve’s expectations. As a result, Fed officials are now shifting from trying to control inflation to the other half of their so-called dual mandate: maintaining the health of the job market.
Last month, as prices rose at a more moderate pace and data suggested a weaker job market, the Fed opted to cut interest rates significantly by half a percentage point, ultimately cutting rates by two more quarters. A point interest rate cut was implemented. That year.
But the outlook has become more uncertain after September’s better-than-expected jobs report, as well as recent hurricanes and tensions in the Middle East that could push prices higher.
This story is in development and will be updated.
