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The Labor Department reported that the producer price index for final demand, which measures inflation at the wholesale level, increased by a seasonally adjusted (+0.5%) in September. This follows readings of (+0.7%) and (+0.6%) over the previous months. On an unadjusted basis the PPI is up (+2.2%) on a year-over-year basis, this is the largest jump since a (+2.3%) reading in April. The index for final demand goods rose for the third consecutive month (+0.9%). Nearly 40% of the increase in prices for final demand goods is attributable to a (+5.4%) jump in the index for gasoline. The index for final demand services increased (+0.3%). Over 60% of the increase in prices for final demand services is attributable to prices for final demand services less trade, transportation, and warehousing, which increased (+0.3%). Excluding food, energy, and trade services, the so-called core PPI increased a seasonally adjusted (+0.2%) in September, unchanged from August. The core PPI is up (+2.8%) from a year ago, down from the (+2.9%) readings in both August and July.
Federal Reserve officials at their September meeting indicated that while current inflation was unacceptably high, it had moderated somewhat over the past year. They also noted that further evidence would be required for them to be confident that inflation was moving towards the FOMC’s 2% objective. The minutes showed that “A majority of participants judged that one more increase in the target federal funds rate at a future meeting would likely be appropriate, while some judged it likely that no further increases would be warranted”. There was unanimity from the Committee to maintain a restrictive policy. The Committee kept the federal funds rate at 5.25%-5.5%. Most of the participants continued to maintain an uncertain outlook of the economy, noting the need to “proceed carefully” as whether to further increase the benchmark interest rate. Several participants commented that the policy rate was “likely at or near its peak” and that policy decisions should “shift from how high to raise the policy rate to how long” to keep it at restrictive levels.
The U.S. Bureau of Labor Statistics reported the consumer price index increased (+0.4%) in September, this follows seasonally adjust readings of (+0.6%), (+0.2%), and (+0.2%) over the previous months. The all items index has increased (+3.7%) over the last 12 months. This compares to (+3.7%) , (+3.2%) and (+3.0%) over the previous months. The shelter index which makes up about one-third of the CPI weighting was the largest contributor to the monthly all items increase. The (+0.6%) reading for shelter accounted for over half of the increase and marks the 41st consecutive monthly increase. The index for gasoline was also a major factor, registering a (+2.1%) monthly jump. The energy index rose (+1.5%) with increases coming from all energy sub-indexes, except for natural gas which declined (-1.9%). The food index increased (+0.2%), matching the previous 2-months. Core CPI inflation which excludes food and energy increased (+0.3%) in September and follows readings of (+0.3%), (+0.2%) and (+0.2%) over the previous months. The annual rate of core CPI inflation is now at (+4.1%) as compared to (+4.3%), (+4.7%), and (+4.8%) over the previous months. The shelter index increased (+7.2%) year-over-year, accounting for over 70% of the total increase in Core CPI. Other indexes with significant increases over the last year include motor vehicle insurance (+18.9%), recreation (+3.9%), personal care (+6.1%), and new vehicles (+2.5%).
Tuesday October 17 – Retail Sales (MoM) (September)
Thursday October 19 – Existing Home Sales (September)
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