Wholesale prices rose by 0.2 percent, in line with expectations

Wholesale prices rose about in line with expectations in August, the last inflation data point as the Federal Reserve prepares to cut interest rates.

The producer price index, a measure of the cost of final demand for goods and services received by producers, rose 0.2 percent month-on-month, the Bureau of Labor Statistics said Thursday, in line with the Dow Jones consensus estimate.

Excluding food and energy, the producer price index rose 0.3 percent, slightly above the consensus estimate of 0.2 percent. Excluding trade services, the core increase was the same.

On a 12-month basis, the producer price index rose by 1.7 percent. Excluding food, energy and trade, the annual rate was 3.3 percent.

In other economic news on Thursday, the Labor Department said a total of 230,000 initial jobless claims were filed in the week ending September 7, up 2,000 from the previous period and above the estimate of 225,000.

Stock market futures were little changed following the report, while US Treasury yields mostly declined.

According to the PPI, services prices were the main reason for the increase, rising 0.4 percent month-on-month, driven by an increase in the services sector excluding trade, transportation and warehousing. Another important factor was a 4.8 percent increase in guest room rents.

Goods prices remained unchanged month-on-month, offsetting a 0.6% increase in July.

The release comes a day after the BLS reported that consumer prices rose 0.2 percent month-on-month, as expected. However, the report also showed that core prices rose 0.3 percent, slightly more than expected. The increase was mainly due to an increase in housing spending.

On an annual basis, headline inflation in the consumer price index (CPI) fell to 2.5%, while core inflation remained at 3.2%.

Neither report is expected to stop the Fed from cutting interest rates by a quarter of a percentage point when its two-day meeting ends on Wednesday. The central bank's benchmark overnight rate is currently in a range of 5.25 percent to 5.5 percent.

Market prices had indicated some uncertainty about the size of the Fed's rate cut, but recent data and statements from policymakers have prompted Wall Street to consider a more traditional quarter-percent cut rather than a more aggressive half-percent cut.

Recently, Fed officials have focused more attention on the slowdown in the labor market.

The jobless claims report suggests that there has not been a sharp increase in layoffs, although the weekly number has increased slightly in recent months.

The number of ongoing claims, one week back, rose slightly to 1.85 million, an increase of just 5,000 from the previous period.