Wholesale inflation plunged by the largest amount in more than three years in September as a record drop in the cost of gasoline offset rising prices in a number of other areas. The Labor Department reported that wholesale prices overall fell 1.3 percent last month, nearly double the decline that analysts had been expecting. | “Gasoline prices plummeted 22.2 percent, the biggest one-month decrease on record.” |
While the overall inflation performance was much better than expected, core inflation, which excludes energy and food, jumped by 0.6 percent in September, the biggest increase in this area in 20 months. Much of that gain was due to a jump in new car prices, which had been falling previously because of the widespread use of attractive incentives aimed at moving a backlog of unsold cars.
Financial markets are hoping that a slowing economy and recent sharp declines in global oil prices will help to lower inflation pressures in coming months and keep the Federal Reserve from pushing interest rates higher. After raising rates for a record 17 consecutive times, the Fed left rates unchanged at its August and September meetings. The Fed meets again next week and economists widely expect no change at that meeting either.