U.S. Producer Prices Surge 1.3% in September, Marking Largest Monthly Gain Since March 2022
The U.S. Producer Price Index for final demand jumped 1.3 per cent in September, driven by soaring energy and goods costs. The year-over-year increase reached 6.3 per cent, the highest since December 2022, suggesting inflation is broadening beyond energy products and potentially putting a Federal Reserve interest rate hike back on the table.
The U.S. Producer Price Index (PPI) for final demand jumped 1.3 per cent in September, marking the largest monthly gain since March 2022, according to data from the Labor Department’s Bureau of Labor Statistics. Over the 12 months through September, the PPI soared 6.3 per cent, the biggest year-over-year increase since December 2022.
The September reading significantly exceeded expectations. Economists polled by Reuters had forecast the PPI to increase 0.5 per cent for the month. Additionally, the August PPI figure was upwardly revised to a 0.5-per-cent rise from the previously reported 0.4-per-cent gain.
Producer goods prices increased 2.6 per cent in September, representing the largest rise since the government started tracking the series in December 2009. A 10.8 per cent surge in energy prices accounted for more than 80 per cent of the broad-based rise in goods prices. Gasoline prices alone rose 20.3 per cent during the month. Elevated oil prices linked to the US-Israeli war with Iran have contributed to these energy costs.
Services prices also accelerated, shooting up 0.8 per cent in September after climbing 0.2 per cent in August. Margins for trade services surged 1.4 per cent, accounting for nearly half of the overall increase in services prices. In contrast, margins for automotive fuels and lubricants retailing plunged 30.3 per cent.
The data suggests that inflationary pressures are broadening out beyond energy products. This shift has implications for monetary policy, potentially putting a Federal Reserve interest rate hike this month back on the table.