Ahead of the Bell: US producer prices

Markets Associated Press

The Labor Department reports Wednesday on October producer price inflation at 8:30 a.m. Eastern.

Continue Reading Below

MORE OF THE SAME: Economists expect that producer prices, which are charged by manufacturers and farmers and show prices before they reach consumers, rose 0.3 percent last month, same as September's increase, according to a survey by the data firm FactSet.

MODEST INFLATION: Rising energy and food costs lifted producer prices in September. But overall inflation remains tame. Core producer inflation, which strips out volatile energy and food prices, rose 0.3 percent in September and just 0.7 percent over the previous year.

Consumer prices rose in September at an annual pace of just 1.5 percent, well below the Federal Reserve's 2 percent inflation target. Low oil prices — currently well below $50 a barrel — have helped keep inflation in check.

FED WATCHING: Nonetheless, the Fed has been dropping hints that it might resume raising U.S. interest rate at its next meeting Dec. 13-14. The Fed raised rates nearly a year ago for the first time since 2006 and was widely expected to follow up with several more hikes in 2016. But it held off as the U.S. economy stalled from late 2015 through mid-2016 and the global economy continued to look weak.

At its last meeting Nov. 1-2, the Fed described a healthy job market, rising consumer spending and improved economic growth after a weak start to the year. All of that helps explain why it said the case for a rate hike has "continued to strengthen."

Continue Reading Below

Some economists thought before the election that a victory by Donald Trump might cause havoc in financial markets and push the Fed to delay once more. But U.S. stocks have rallied, and investors peg the chance of a December hike at more than 90 percent, according to figures from the CME Group.