Producer prices decline 0.3% in September

PPI Drops to-0.3% Year Over Year Core 2

PPI Drops to-0.3% Year Over Year Core 2

The producer price index dropped 0.3%.

A measure of underlying USA producer prices posted the biggest monthly drop in more than four years, adding to signs of tame inflation pressures that potentially offer Federal Reserve policy makers more leeway to lower interest rates.

US wholesale prices unexpectedly sank in September.

Producer prices were up 1.4% from September 2018, the smallest 12-month gain in nearly three years.

On a 12-month basis, the PPI rose 1.4%. The so-called core PPI increased 1.7% in the 12 months through September after climbing 1.9% in August.

Both Labor Department measures feed into the inflation gauge that the Fed targets, the personal-consumption-expenditures price index, which has been below its 2% goal for most of the decade-long economic expansion.

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Over the past year, producer prices have risen a modest 1.4%, and core producer prices are up 2%.

In addition, private services industry growth slowed to a three-year low in September. Transportation and warehousing prices also dropped, while the index for hospital outpatient care increased.The U.S.

US financial markets were little moved by the producer inflation data.

Gasoline accounted for three quarters of the 0.4 per cent drop in goods prices last month. This tranche, along with the batch that will impact about $160 billion worth of goods in December, more directly targets American consumers.Analysts monitor this report to assess potential price pressures set to show up at the consumer level. For September, however, this does not change the picture month. Food prices dropped 0.6 per cent in August. The index for final demand goods fell by 0.4% in September, after falling by 0.5% in August.

Almost half of the drop in services was attributed to a 2.7 per cent decrease in machinery and vehicle wholesaling.

Portfolio management fees were unchanged last month after increasing 0.5 per cent in August. This component of the producer price index does not measure prices received.

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