WASHINGTON?A gauge of U.S. business prices held flat in October, suggesting inflation pressures remain mild.
The producer-price index for final demand, measuring changes in the prices that U.S. companies receive for their goods and services, was unchanged on a seasonally adjusted basis in October compared with the prior month, the Labor Department said Wednesday. Economists surveyed by The Wall Street Journal had expected a 0.3% increase.
From a year earlier, prices rose 0.8%. That was the strongest annual gain since December 2014, but still historically soft.
Excluding often-volatile prices for food and energy, the index fell 0.2% last month. Forecasters had expected a 0.2% gain. From a year earlier, those core prices were up 1.2%
Prices weredown 0.1% from September when excluding food, energy and a jumpy measure of wholesaler and retailer margins known as trade services. That measure advanced 1.6% on the year.
Declining prices for services was a significant factor keeping costs in check. Prices for consumer loans, hospital outpatient care and airfare all fell. Prices for securities brokerage and related services fell 5.7% on the month, the largest decrease on record.
PPI is an inflation gauge that looks at prices businesses receive from customers, including consumers, other businesses and governments. As a result, changes in the index doesn't necessarily directly translate into what consumers pay. But PPI readings have been consistent with other gauges in showing an extended period of low inflation.
The consumer-price index rose 1.5% in September from a year earlier. That was the strongest increase since 2014, but still below historical averages. The Labor Department willrelease October CPI on Thursday.
The Commerce Department's personal-consumption expenditures price index, the Federal Reserve's preferred inflation measure, rose 1.2 % from a year earlier in September. That was the firmest increase since November 2014, but still below the Fed's 2% target. The target has not been achieved for more than four years.
Weak inflation is one factor holding back the Fed from raising its benchmark interest rate since December 2015. Officials are likely to consider a rate increase at their meeting next month.
"The Fed appears reasonably close to achieving both the inflation and employment components of its mandate," Fed Vice Chairman Stanley Fischer said Friday. "Accordingly, the case for removing accommodation gradually is quite strong."
The unemployment rate, 4.9% last month, is low by historical standards. Signs of wage gains are emerging, but some workers remain frustrated by the lackluster improvement during the expansion's first seven years.
Wednesday's report showed food prices fell 0.8% last month from September, led by decreased vegetable prices. Energy prices rose 2.5% in October. Gasoline costs increased 9.7% last month.
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(END) Dow Jones Newswires
November 16, 2016 08:55 ET (13:55 GMT)
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