"Federal Reserve mouthpiece": The Fed's preferred inflation gauge may remain largely unchanged.

According to a report co-authored by Nick Timiraos, a Wall Street Journal reporter known as the "Federal Reserve mouthpiece," data released by the U.S. Department of Labor on Tuesday indicates that while rising energy and food costs pushed up wholesale prices in September, some items included in the Fed's preferred inflation gauge likely kept the index roughly in line with recent months' levels.

After falling 0.1% month-on-month in August, the Producer Price Index (PPI) rose 0.3% month-on-month in September, in line with economists' expectations. PPI data typically shows greater price volatility than what consumers see in stores and online.

Excluding food and energy, the core PPI rose less than expected, up 2.6% year-on-year, the most modest increase since July 2024.

The release of the PPI data was delayed by more than a month due to the government shutdown. Two weeks after the impasse ended, federal statistical agencies are still working hard to submit the data.

The PPI data has a limited impact on Federal Reserve policymakers, but some of the price data released on Tuesday will be used to calculate the Personal Consumption Expenditures (PCE) price index—a key indicator for the Fed to measure progress toward its 2% inflation target.

The PCE index is compiled by combining data from the PPI, CPI, and import prices. As these data are released, forecasters can reliably estimate the approximate level of the PCE index.

Citigroup economists estimate that, based on PPI and CPI data, core PCE, excluding volatile food and energy prices, is expected to rise 0.19% month-on-month in September, slightly lower than the 0.23% month-on-month increase in core CPI for the same month.

Omair Sharif, an inflation forecaster at Inflation Insights, estimates that core PCE will rise 0.2% month-over-month in September. If this forecast comes true, the year-over-year increase in core PCE will fall to 2.8% in September from 2.9% in August.

The U.S. Commerce Department said Monday that the official PCE inflation report is scheduled to be released on December 5 (next Friday).

Although the September inflation data will be nearly three months behind when the Federal Reserve meets on December 9-10, it will still be the latest official inflation data available to policymakers as they weigh the direction of interest rates.

The U.S. Labor Department stated that some economic data (such as last month's unemployment rate and consumer inflation data) could not be compiled retrospectively because these data rely on concurrent surveys. October's job growth data will be released next month, but after the Federal Reserve meeting.

The Federal Reserve's December meeting is expected to be highly contentious. Officials are divided between two options: a third consecutive 25-basis-point rate cut to provide a buffer for the weak labor market; or keeping rates unchanged to more effectively combat persistent inflation. (Jinshi)