US PPI consistent with moderate inflation - Wells Fargo

According to analysts from Wells Fargo, core goods and services prices rose more modestly in September but they are within the realm of the Fed’s inflation target.

Key Quotes: 

“Producer prices climbed 0.4 percent in September on another sizable lift in the cost of energy goods (up 3.4 percent). Food prices were flat, while core goods rose 0.3 percent. The 0.4 percent rise in services last month was largely traced to a 0.8 percent rise in the trade component, which is measured in margins. Transportation services, which can be susceptible to fluctuations in energy costs, rose 1.0 percent.”

“Construction costs were little changed in September (up 0.1 percent), but will likely see the upward trend of recent months continue as rebuilding efforts in the Gulf region get underway. While not the Fed’s primary measure, the PPI has firmed over the past year and is in the realm of the FOMC’s 2 percent goal. PPI is up 2.6 percent year-over-year while our preferred measure of the core (ex-food, energy, and trade services) is up 2.1 percent.”