US PPI jumps 1.3% in September, raising inflation pressure
US producer prices rose 1.3% in September from the previous month, the fastest monthly increase since March 2022, according to Bureau of Labor Statistics data…
WASHINGTON — US PPI rose 1.3% in September from the previous month, the sharpest monthly increase since March 2022, according to Bureau of Labor Statistics data released Thursday. The jump, which exceeded economists’ expectations, adds to evidence of persistent price pressures and could feed into the inflation measure used by the Federal Reserve.
Wholesale prices increased 6.3% from a year earlier, their highest annual rate since December 2022. Economists surveyed by FactSet had expected a 0.5% monthly rise and a 5.3% annual increase.
The September reading followed an increase of 0.5% in August, when the annual rate was 5.6%. It was also the second hotter-than-expected US inflation report this week, after the September Consumer Price Index showed broader price pressures.
Energy costs drive wholesale price jump
Energy prices were the main force behind September’s rise. They accounted for 80% of the 2.9% increase in goods prices, the largest monthly rise in that category in Bureau of Labor Statistics data going back to 2009. The source attributed the energy cost increase to geopolitical conflicts, including the war with Iran.
Price pressures were not limited to energy. Core PPI, which excludes food and energy, rose 0.7%, its fastest pace in five months. That lifted its annual rate to 5%, the highest since January 2023.
Transportation-related categories, including airfares, contributed to the rise in core wholesale inflation, Oliver Allen, senior US economist at Pantheon Macroeconomics, said. He said service price increases looked more muted when transportation, warehousing and trade services were excluded.
“I don’t think the details are as ugly as the topline headline and core numbers suggest,” Allen said. “But they’re still not great.”
Prices for finished consumer goods, excluding food and energy, rose 0.2% from August. Allen said those prices were expected to keep climbing in the coming months as higher energy costs move through the economy.
Why the PPI matters for consumers and the Fed
The Producer Price Index tracks the average change in prices producers receive for goods and services. It can offer an early indication of costs that may later reach consumers, though wholesale increases do not translate automatically or immediately into retail prices.
Some PPI data also feeds into the Personal Consumption Expenditures price index, which the Federal Reserve uses for its 2% inflation target. The September CPI and PPI reports offered evidence of persistent inflation, Joe Brusuelas, chief economist at RSM US, said. He expects the PCE report, due later this month, to show the same pattern.
Higher transportation costs are also appearing in some food prices, Brusuelas said. From August, fresh and dry vegetable prices rose 41%, grains increased 17.4% and oilseeds rose 11.4%.
That mix has consequences beyond the inflation data. Rising costs for fuel, transport and food can squeeze household budgets, while a faster pace of wholesale inflation complicates the outlook facing policymakers as they assess price pressures.
Retail sales growth slowed in September
A separate Commerce Department report showed US retail sales rose 0.8% in September, slowing from a 1.3% increase in August. Excluding purchases at gas stations, sales gained just 0.2%.
The figures are adjusted for seasonal patterns but not inflation. Monthly prices rose 0.6% in September, according to the source, meaning the reported retail sales increase came as consumers faced higher costs.
The inflation reports arrive weeks before the US midterm elections, when affordability is expected to be a major concern for voters. The PCE price index is due later this month.
Source: cnn.com
