September's producer price index reading was significantly weaker than forecast. The index of wholesale goods and services came in well below expectations on both month-over-month and year-over-year metrics.
By the numbers: The overall headline reading fell to its lowest level in 3 years, while the core figure, which strips out volatile food and energy prices, reached its lowest level in 2 years.
- The PPI for goods was -0.4% on the month and the services reading was -0.2%.
- Energy prices fell -2.5% for the second month in a row.
The big picture: The weak reading on wholesale prices is the latest sign that inflation is not picking up and could provide more ammo for the Fed to cut U.S. interest rates this month.
Watch this space: "This series doesn't include tariffs, so the takeaway is a bit misleading," BMO Capital Markets VP of U.S. rates strategy Jon Hill said in a note to clients.
- "Any evidence of feed through into CPI will be of core focus on Thursday."
