Price pressures on U.S. producers jumped unexpectedly in September, mirroring a similar trend observed in consumer inflation data reported a day earlier.
The Producer Price Index (PPI) rose more sharply than anticipated in September, and the August reading was upwardly revised. Core producer prices — excluding energy and food — also climbed more than forecasted.
Prior to the release of the PPI report, traders had assigned a nearly 85% chance of a 25-basis-point interest rate cut in November.
Headline PPI for final demand rose by 1.8% year-over-year in September, down from an upwardly revised 1.9% in August. This outcome was slightly above economist expectations of 1.6%, as tracked by TradingEconomics.
On a monthly basis, PPI flattened, decelerating from August’s reading and coming in below the forecasted 0.1% increase.
Food costs soared by 1% month-over-month, recording the largest increase since February.
A significant factor in the September rise in prices for final demand services was a 3% increase in the index for deposit services.
Other contributing indexes included machinery and vehicle wholesaling, furniture retailing, software publishing for desktop and portable devices, apparel wholesaling, and airline passenger services, all of which saw gains
Core PPI soared to 2.8% year-over-year in September, up from August’s 2.4% and slightly above market expectations of 2.7%.
On a month-over-month basis, core PPI rose 0.2%, down from August’s 0.2% pace and matching forecasts.
| PPI Metrics | Econ. consensus | ||
|---|---|---|---|
| Headline PPI (YoY) | 1.8% | 1.9% (upwardly revised from 1.7%) |
1.6% |
| Headline PPI (MoM) | 0.0% | 0.2% | 0.1% |
| Core PPI (YoY) | 2.8% | 2.4% | 2.7% |
| Core PPI (MoM) | 0.2% | 0.3% | 0.2% |
November interest rate cut expectations a marginal downward move after the release.
The U.S. dollar index (DXY), tracked by the Invesco DB USD Index Bullish Fund ETF , as Treasury yields inched higher.
Notably, 30-year yields were up by 5 basis points to 4.41%, the highest since late July. As such, the iShares 20+ Year Treasury Bond ETF ( TLT ) was 0.7% lower during the premarket trading in New York, eyeing a 10-week low.
Futures on the S&P 500 were unchanged, while contracts on the tech-heavy Nasdaq 100 eased 0.2%. On Wednesday, , the SPDR S&P 500 ETF Trust ( SPY ) closed 0.2% lower.
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