The highest increase since March 2022 compared to the previous month... Compared to the previous year, the core PPI rose by 6.3% and by 0.7%... Indicators excluding food, energy, and distribution services also increased.
U.S. producer prices in September rose by a larger amount than market expectations. As energy prices soared and service prices rose, the increase in core indicators excluding food and energy also widened.
The U.S. Bureau of Labor Statistics (BLS) announced on the 15th (local time) that the producer price index (PPI) for final demand in September rose 1.3% from the previous month on a seasonally adjusted basis. It exceeded the market expectation of 0.6% reported by Market Watch. The monthly increase rate was the highest since March 2022, when it was 1.7%.
The increase rate compared to the same month last year was 6.3%, the highest since December 2022 at 6.4%. The previous month's figures were also revised upward. The August PPI increase rate compared to the previous month was adjusted from 0.4% to 0.5%, and the year-on-year increase rate was adjusted from 5.4% to 5.6%.
Core PPI, excluding food and energy, rose 0.7% from the previous month. The increase was larger than the 0.2% increase in August, and also exceeded the 0.3% estimate presented in the Investing.com economic calendar. The increase rate compared to the same month last year was 5.0%.
In the commodity sector, the rise in energy prices was noticeable. Prices of final demand goods rose 2.6% from the previous month, and energy prices rose 10.8%. According to the BLS, the energy sector accounted for more than 80% of the increase in commodity prices. Among these, gasoline prices jumped 20.3%, with one item accounting for half of the increase in product prices.
Service prices rose 0.8% from the previous month. The distribution service index, which reflects the difference in sales and purchase prices for wholesalers and retailers, rose 1.4%, accounting for nearly half of the increase in service prices. Prices for transportation and warehousing services also increased by 3.4%.
PPI, excluding food, energy, and distribution services, rose 0.5% from the previous month, expanding the increase from 0.3% in August. This indicator also exceeded the estimate of 0.3% reported by Market Watch. This shows that inflation pressure is not limited to changes in food and energy prices and distribution margins.
This announcement followed the increase in consumer prices. The September consumer price index (CPI), released the day before, rose 0.6% compared to the previous month and 3.7% compared to the same month last year. This is higher than 0.4% and 3.4% in August, respectively. The expansion of price increases at both the consumer and producer levels may increase concerns about a re-acceleration of inflation.
Personal consumption expenditures (PCE) prices, which the Federal Reserve System (Fed) values, are calculated using detailed price data from CPI and PPI. PPI data is used for some services such as air transportation, and air passenger fares also increased in this announcement. The overall PPI increase rate is not directly transferred to PCE because the reflection targets and weights for each index are different. The U.S. Bureau of Economic Analysis (BEA) is scheduled to release a personal income and expenditure report, including PCE prices, for September on the 29th.
