Customers shop at a Costco wholesale store in Miami on December 15, 2023.
Joe Rydell | Getty Images News | Getty Images
Wholesale prices rose in October, though largely in line with expectations and mostly consistent with the Federal Reserve cutting interest rates again in December, the Bureau of Labor Statistics reported Thursday.
The Producer Price Index, which measures what producers get for their products, rose a seasonally adjusted 0.2% for the month, up a tenth of a percentage point from September although in line with Dow Jones forecasts. On a 12-month basis, overall headline inflation was 2.4%.
Excluding food and energy, the core Producer Price Index rose 0.3%, also one-tenth more than in September and also in line with expectations. The 12-month rate was at 3.1%.
Although the readings are above the Fed's 2% inflation target, the trend shows that price increases are generally moderate and that inflation is being driven by isolated factors.
Services rose 0.3% month-on-month, accounting for most of the increase in the PPI, and was largely driven by a 3.6% rise in portfolio management rates. Food prices fell 0.2% month-on-month while energy prices fell 0.3%. Commodity prices rose 0.1% after falling in the previous two months.
Markets did not react much to the news, with stock futures pointing to a mixed open while Treasury yields remained elevated.
Traders expect the Fed to follow up its September and November interest rate cuts with another quarter-point cut at its December 17-18 meeting. After that, market prices point to the Fed skipping January and moving at a slower pace of easing through 2025.
The market's implied probability of a December rate cut fell to 76.1% after the release, an area that still indicates a strong likelihood, according to CME Group's FedWatch gauge of futures prices.
In other economic news Thursday, the Labor Department reported that the pace of layoffs continued to moderate after a brief spike.
Initial claims for unemployment benefits totaled 217,000 for the week ending November 9, down 4,000 from the prior period and slightly below the estimate of 220,000.
Continuing claims, which were delayed by a week, totaled 1.873 million, down 11,000 from the previous week.
