December 23, 2024

Customers shop at a Costco wholesale store in Miami on December 15, 2023.

Joe Raeder | Getty Images News | Getty Images

The U.S. Bureau of Labor Statistics reported on Thursday that wholesale prices rose slightly in October, but were generally in line with expectations and were broadly consistent with the Federal Reserve cutting interest rates again in December.

this producer price indexA measure of how much money producers get from their products rose a seasonally adjusted 0.2% for the month, up a tenth of a percentage point from September but in line with the Dow Jones consensus forecast. On a 12-month basis, the overall wholesale inflation rate was 2.4%.

Excluding food and energy, core PPI rose 0.3%, one-tenth higher than in September and in line with expectations. The 12-month interest rate is 3.1%.

Although the reading was above the Fed’s 2% inflation target, trends showed that price increases were generally slowing and that inflation was being driven by isolated factors.

Services rose 0.3% for the month, accounting for most of the PPI gain, driven primarily by a 3.6% rise in portfolio management prices. Food prices fell 0.2% this month, while energy prices fell 0.3%. Commodity prices edged up 0.1% after falling in the previous two months.

The market reacted little to the news, with index futures opening mixed and Treasury yields remaining higher.

Traders expect the Fed to cut interest rates by another 25 percentage points at its Dec. 17-18 meeting, following its cuts in September and November. Markets have since priced in the Fed skipping January and slowing the pace of easing until 2025.

After the announcement, the market’s implied probability of a rate cut in December fell slightly to 76.1%, an area that still indicates a high likelihood of a rate cut, as measured by CME Group’s FedWatch futures prices.

In other economic news Thursday, Department of Labor Report The pace of layoffs continues to slow after a brief surge.

In the week ended November 9, initial jobless claims totaled 217,000, a decrease of 4,000 from the previous period and slightly lower than the 220,000 expected.

The number of people continuing to apply for unemployment benefits was 1.873 million, a decrease of 11,000 from the previous week.

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