According to our analysis there was a potential of 85 pips / ticks profit out of the following 2 events in October 2024. The potential performance in 2023 was 13,607 pips / ticks.

• US BLS Consumer Price Index (CPI) (54 pips / 13 November 2024)

• US BLS Producer Price Index (PPI) (31 pips / 14 November 2024)

Total trading time would have been around 1 minute! (preparation time not included)

Understanding October 2024 Inflation Data: Insights from the PPI and CPI Reports

The U.S. Bureau of Labor Statistics (BLS) recently released its Producer Price Index (PPI) and Consumer Price Index (CPI) reports for October 2024. Together, these reports provide a comprehensive view of inflationary trends, capturing price changes from the perspectives of producers and consumers. Let’s break down the key findings from each report and explore their implications for businesses, policymakers, and consumers.

October 2024 Producer Price Index (PPI): Inflation from the Production Side

The PPI, which measures price changes at the wholesale level, showed a 0.2% rise in October, signaling steady but moderate inflation in production costs. Over the past 12 months, the final demand index increased by 2.4%, reflecting contained inflationary pressures.

Key Drivers of PPI Changes

1. Final Demand Services:

   • Services prices rose 0.3%, marking a consistent upward trend.

   • Notable increases were seen in transportation and warehousing (+0.5%) and portfolio management services (+3.6%).

   • The rise in service costs highlights challenges for industries reliant on logistics and professional services.

2. Final Demand Goods:

   • Goods prices rose by a modest 0.1%, reversing prior declines.

   • Excluding food and energy, goods prices climbed 0.3%, reflecting strong demand for manufactured products.

   • Noteworthy was an 8.4% jump in carbon steel scrap prices, affecting construction and manufacturing industries.

3. Intermediate Demand:

   • Processed goods for intermediate demand rose 0.5%, while unprocessed goods surged 4.1%—the largest increase since August 2022.

   • A 9.9% spike in crude petroleum prices drove much of the intermediate goods inflation.

Implications of the PPI Trends

• For Businesses: Rising costs in services and intermediate goods could lead to higher production expenses. Companies may need to manage costs or adjust pricing to maintain profitability.

• For Policymakers: Persistent core PPI inflation may influence Federal Reserve decisions on interest rates.

• For Consumers: Increased wholesale costs may translate into higher retail prices, particularly in services like travel, healthcare, and retail products.

October 2024 Consumer Price Index (CPI): Inflation from the Consumer Side

The CPI, which measures price changes experienced by consumers, increased by 0.2% in October, consistent with the prior three months. Over the past year, the CPI rose 2.6%, slightly accelerating from September’s 2.4%.

Key Drivers of CPI Changes

1. Shelter Costs:

   • Shelter costs rose 0.4% and have increased 4.9% year-over-year.

   • Rent and owners’ equivalent rent were major contributors, reflecting continued pressure in the housing market.

2. Food Prices:

   • The food index edged up 0.2%, a slower pace than September’s 0.4% rise.

   • Prices for cereals, bakery products, and dairy surged by 1.0%, while meat and egg prices declined significantly (-1.2% and -6.4%, respectively).

3. Energy:

   • The energy index remained flat, providing stability after recent declines. Gasoline prices fell 0.9%, but electricity costs rose 1.2%.

4. Core CPI:

   • Excluding food and energy, core CPI rose 0.3%.

   • Used cars and trucks (+2.7%), airline fares (+3.2%), and medical care services (+0.4%) were significant contributors.

5. Declines in Other Categories:

   • Apparel prices dropped 1.5%, and communication and household furnishings saw declines, partially offsetting broader price increases.

Implications of the CPI Trends

• For Consumers: Shelter costs remain the primary inflationary burden, while declines in energy prices provide some relief. Food price increases are more modest but uneven across categories.

• For Policymakers: The steady rise in core CPI highlights persistent inflation in non-volatile sectors, which may shape future monetary policy decisions.

What Do These Reports Mean for the Economy?

Both the PPI and CPI reports indicate that inflation is present but manageable, with specific areas driving price increases:

• Businesses: Rising costs in services and core goods could pressure margins, particularly for industries reliant on logistics, professional services, or raw materials like steel.

• Policymakers: While inflation remains above the Federal Reserve’s target, its contained nature might support a cautious approach to rate hikes.

• Consumers: Retail prices are likely to rise in areas linked to higher production costs, such as travel, healthcare, and housing, but energy price stability offers some respite.

Looking Ahead: Key Trends to Monitor

As we move into the final months of 2024, the November inflation reports (due in December) will shed more light on these trends. Key areas to watch include:

1. Service Sector Inflation: Any acceleration here could signal broader price pressures.

2. Intermediate Demand: Rising production costs may translate into retail inflation if trends persist.

3. Energy Prices: Seasonal fluctuations in heating costs and crude oil prices could impact both wholesale and retail inflation.

Final Thoughts

October 2024’s PPI and CPI reports offer a snapshot of an economy navigating steady inflation, with sector-specific pressures shaping the broader picture. By understanding these trends, businesses and consumers can better prepare for potential price changes, while policymakers can fine-tune strategies to maintain economic stability.

Stay tuned for our next update in December, as we continue to track the evolving inflation landscape and its implications for everyday life and economic policy.

Disclaimer: This blog post is for informational purposes only and should not be construed as financial advice. Always conduct thorough research and consider seeking advice from a financial professional before making any investment decisions.

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