U.S. producer prices post biggest monthly gain in 4-1/2 years as inflation pressures broaden
September wholesale inflation accelerates sharply in the U.S., adding to signs that price pressures are spreading beyond energy and into a wider range of goods and services. The jump in producer prices follows a broad increase in consumer prices reported a day earlier, keeping the possibility of a Federal Reserve interest rate hike this month in focus.
Highlights
- U.S. Producer Price Index for final demand surged 1.3% in September, the largest monthly gain since March 2022, exceeding expectations of 0.5%.
- In the 12 months through September, PPI jumped 6.3%—the strongest annual rise since December 2022—accelerating from 5.6% in August.
- Producer goods prices rose 2.6%, driven by a 10.8% surge in energy costs, including a 20.3% spike in gasoline prices, while services prices increased 0.8%.
September price surge driven by energy and services
As reported by Reuters, citing the U.S. Labor Department's Bureau of Labor Statistics, the Producer Price Index for final demand jumps 1.3% in September after an upwardly revised 0.5% increase in August, marking the largest monthly gain since March 2022.Economists polled by Reuters had expected a 0.5% rise after a previously reported 0.4% increase in August. In the 12 months through September, the PPI climbs 6.3%, the strongest annual increase since December 2022, following a 5.6% advance in August.
Producer goods prices rise 2.6%, the largest increase since the government began tracking the series in December 2009. A 10.8% jump in energy prices accounts for more than 80% of the broad-based increase in goods prices, with gasoline prices up 20.3%.
Prices also increase for diesel, jet fuel and residential electric power, while wholesale food prices rebound 1.2% after three straight monthly declines. Excluding the volatile food and energy components, producer goods prices rise 0.3%.
Services prices shoot up 0.8% after increasing 0.2% in August. A 1.4% rise in margins for trade services accounts for nearly half of the broader gain in services prices, while costs also increase for road freight transport, hotel and motel rooms, and airfares.
In our earlier article on the spike in crude oil shipping costs, we explained how conflict-related risks on key tanker routes were driving freight and insurance rates sharply higher and turning transport into a much larger share of the oil price. We also noted that these higher logistics costs can quickly feed through into gasoline and broader consumer prices, with import-dependent markets and refiners facing the most immediate pressure.
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