The Dow Jones (DJIA) is set to open in positive territory on Wednesday following an encouraging inflation update.
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August’s producer price index (PPI), which measures inflation at the wholesale level, registered a monthly drop of 0.1%, below the consensus estimate for a rise of 0.3%. In addition, July’s reading was revised down to 0.7% from 0.9%. That’s a big relief, as July’s unrevised PPI marked the largest increase in over three years, stirring fears of sticky inflation. August’s PPI rose by 2.6% on a yearly basis, also below the estimate of 3.3%.
Soft Core PPI Strengthens Case for Fed Rate Cut
Core PPI, which excludes volatile food and energy items, fell by 0.1% month-over-month and rose 2.8% year-over-year. Economists were expecting a rise of 0.3% and 3.5%, respectively.
The data comes ahead of a pivotal Federal Open Market Committee (FOMC) meeting, where the central bank is widely expected to cut rates for the first time since December 2024. With lower inflation, the Fed has more incentive to lower rates, as a higher rate is necessary to combat higher prices.
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