Highlights
Headline inflation remained unexpected strong at the producer level in September but weakened at the core level. Overall PPI inflation posted at 1.1 percent, following a 1.7 percent jump in August. Market expectations were for a 0.8 percent increase. The core rate, which excludes both food and energy, was unchanged after rising 0.2 percent the month before. Analysts projected a 0.2 percent rise for September.

Food inflation eased to a 0.2 percent increase after a 0.9 percent boost in August. Energy remained robust with a monthly 4.7 percent jump, following a surge of 6.4 percent the prior month. Gasoline increased 9.8 percent, following a 13.6 percent spike in August.

Within the core, higher prices for light motor trucks were offset by declining prices for communication and related equipment.

For the overall PPI, the year-ago rate in September came in at 2.2 percent versus 2.0 percent in August (seasonally adjusted). The core rate in September stood at 2.3 percent, compared to a year-ago 2.6 percent the prior month. On a not seasonally adjusted basis for September, the year-ago headline PPI was up 2.1 percent, while the core was up 2.3 percent.

The latest PPI report clearly was mixed with energy still strong but the core soft. Equity futures were little changed on the news.

Market Consensus before announcement
The Reuter's/University of Michigan's consumer sentiment index for the final reading for September fell to 78.3 from 79.2 at mid-month. Still, the final September reading compared very well with 74.3 in August as well as July's 72.3. Softness of the last two weeks was centered entirely in the assessment of current conditions which fell 2.6 points from mid-month to a final September reading of 85.7. This was three points below the final August reading which does not generally bode well for monthly economic data in September. But expectations were a big positive, improving one tenth from mid-month to end at 73.5 which was up an extremely strong 8.4 points from August.