**MNI 5 THINGS:US September PPI As Expected +0.2%,Core +0.2%>

--5 Things We Learned From The September PPI Data

By Kevin Kastner, Harrison Clarke, and Shikha Dave

     WASHINGTON (MNI) - The following are the key points from the 

Producer Price Index data for September released by the Labor Department 

Wednesday: 

     - The September PPI data were exactly as expected, with 0.2% gains 

for both the overall and ex-food and energy readings after declines in 

the previous month. Energy and foods prices declined, but trade 

services posted a small gain. PPI ex. trade services, food, and energy 

was up 0.4% after a 0.1% gain in the previous month. 

     - As a result, the overall year/year rate of inflation slipped in 

September. Overall PPI is now up 2.6% y/y vs 2.8% in August. At the same 

time, though, ex food and energy PPI rebounded to 2.5% y/y vs 2.3% in 

August. However, PPI ex food, energy and trade services remained at 

2.9%. 

     - The personal consumption price measure in the data, which some 

analysts use as a preview measure for the CPI and PCE price data, was up 

0.1% overall and up 0.2% excluding food and energy after flat readings 

in August, suggesting somewhat stronger readings for the other inflation 

data still to come for the month. Outside of food, energy and trade 

services, the personal consumption measure was up 0.3%. The year/year 

rates for all three measures were above 2%. 

     - Energy prices posted a 0.8% decrease in September after a 0.4% 

gain in August, with a 3.5% plunge in gasoline prices a key factor. Food 

prices fell 0.6% in the month on eggs, poultry and vegetables, while the 

volatile trade services component was up 0.1% in September after large 

declines in the previous two months. 

     - When the small gain in trade services and the declines in food 

and energy prices are stripped away, the 0.4% gain in the remaining 

items and the improvement in the year/year rates shows strength in the 

underlying data. As a result, this data should be seen as a confirmation 

of a return to slow, but steady, core inflation gains. The CPI data will 

be released on Thursday and should provide more context. 

     ** MNI Washington Bureau: 202-371-2121 ** 

[TOPICS: MAUDS$,M$U$$$,MAUDR$]