U.S. Inflation Data Shows Mixed Trends Amid Rising Energy Costs

According to Odaily, a report co-authored by Wall Street Journal journalist Nick Timiraos highlights that despite rising energy and food costs in September, certain components of the Federal Reserve's preferred inflation measure may remain stable compared to recent months. The U.S. Labor Department's data released on Tuesday shows that the Producer Price Index (PPI) increased by 0.3% in September, following a 0.1% decline in August, aligning with economists' expectations. The PPI data often exhibits more volatility than consumer prices seen in stores and online. Excluding food and energy, the core PPI rose by 2.6% year-over-year, marking the mildest increase since July 2024. The release of the PPI data was delayed by over a month due to a government shutdown, and federal statistical agencies are working to catch up on reporting. While the PPI data has limited impact on Federal Reserve policymakers, some of the price data released on Tuesday will be used to calculate the Personal Consumption Expenditures (PCE) Price Index, a key measure for the Fed's 2% inflation target. The PCE index is compiled using data from the PPI, Consumer Price Index (CPI), and import prices. As these data points are released, forecasters can estimate the approximate level of the PCE index. Economists at Citigroup estimate that based on PPI and CPI data, the core PCE, excluding volatile food and energy prices, is expected to rise by 0.19% month-over-month in September, slightly below the core CPI's 0.23% increase. Inflation Insights' Omair Sharif predicts a 0.2% month-over-month increase in core PCE. If these forecasts hold, the year-over-year core PCE increase for September would decrease from 2.9% in August to 2.8%. The U.S. Commerce Department announced that the official PCE inflation report is scheduled for release on December 5. Although the September inflation data will be nearly three months old by the time of the Federal Reserve's meeting on December 9-10, it will still be the latest official inflation data available for policymakers to consider when assessing interest rate directions. The U.S. Labor Department noted that some economic data, such as last month's unemployment rate and consumer inflation data, cannot be retroactively compiled due to reliance on concurrent surveys. October's employment growth data will be released next month, but after the Federal Reserve meeting. The upcoming December Federal Reserve meeting is expected to be contentious, with officials divided between a third consecutive 25 basis point rate cut to support a weakening labor market or maintaining rates to address persistent inflation.