Month-on-month increase largest since March 2022... Year-on-year rate hits 6.3% as Core PPI climbs 0.7%... Gains widen in metrics excluding food, energy, and trade services.
U.S. producer prices rose more sharply than market expectations in September. As surging energy prices converged with rising service costs, core metrics excluding food and energy also showed a broadening of inflationary pressure.
The U.S. Bureau of Labor Statistics (BLS) announced on the 15th (local time) that the Producer Price Index (PPI) for final demand rose 1.3% month-on-month on a seasonally adjusted basis. This figure exceeded the 0.6% consensus reported by MarketWatch and marked the highest monthly growth rate since the 1.7% recorded in March 2022.
On a year-on-year basis, the index climbed 6.3%, the largest increase since December 2022 (6.4%). Previous data was also revised upward; the month-on-month increase for August was adjusted from 0.4% to 0.5%, while the year-on-year figure was raised from 5.4% to 5.6%.
Core PPI, which excludes the volatile food and energy categories, rose 0.7% from the previous month. This represents a significant acceleration from August's 0.2% increase and surpassed the 0.3% estimate listed on Investing.com’s economic calendar. The year-on-year core increase stood at 5.0%.
In the goods sector, the rise in energy prices was particularly prominent. Final demand goods prices rose 2.6% month-on-month, with energy prices surging 10.8%. According to the BLS, the energy sector accounted for more than 80% of the total increase in goods prices. Within this category, gasoline prices jumped 20.3%, with this single item accounting for half of the total rise in goods prices.
Service prices increased 0.8% from the previous month. The trade services index—which reflects the margins (the difference between selling and acquisition prices) for wholesalers and retailers—rose 1.4%, accounting for nearly half of the total increase in services. Transportation and warehousing services also saw a 3.4% rise.
The PPI excluding food, energy, and trade services rose 0.5% month-on-month, accelerating from 0.3% in August. This also topped the 0.3% forecast reported by MarketWatch, indicating that inflationary pressure is not confined solely to volatile commodities or retail margins.
This release follows a similar uptick in consumer-level inflation. The Consumer Price Index (CPI) for September, released the previous day, rose 0.6% month-on-month and 3.7% year-on-year, both higher than August’s 0.4% and 3.4%, respectively. The simultaneous acceleration of price growth at both the producer and consumer levels could heighten fears of an inflationary rebound.
The Federal Reserve’s preferred inflation gauge, the Personal Consumption Expenditures (PCE) price index, is calculated using granular data from both the CPI and PPI. While PPI data is used for certain services like air transportation—where passenger fares rose in this latest report—the different weightings and compositions mean the headline PPI does not translate directly into the PCE. The U.S. Bureau of Economic Analysis (BEA) is scheduled to release the personal income and outlays report for September, including PCE inflation data, on the 29th.
