U.S. producer prices accelerated sharply in September, adding another inflation warning just as the Federal Reserve weighs whether to raise interest rates again.
The Bureau of Labor Statistics reported that its Producer Price Index for final demand rose 1.3% from August, the biggest monthly increase since March 2022. Prices were up 6.3% over the year, the fastest annual pace since December 2022. August's monthly increase was revised to 0.5%.
Energy drove most of the goods increase
Prices for final-demand goods rose 2.6%, the largest increase since that series began in 2009. More than 80% of the gain came from energy, which jumped 10.8%. Gasoline alone rose 20.3% and accounted for half of the goods increase.
The pressure was not limited to fuel. Food prices increased 1.2%, while services prices advanced 0.8%. The narrower measure that excludes food, energy and trade services rose 0.5% for the month and 5% over the year.
Associated Press reported that a separate core measure excluding food and energy climbed 0.7% in September and 5% from a year earlier.
Another complication for the Fed
The producer-price report arrived one day after consumer inflation also came in hot. September CPI rose 0.6% for the month and 3.7% from a year earlier, according to BLS data cited by Reuters.
Together, the reports strengthened the case for additional rate increases, but they did not settle the timing. Reuters quoted several economists and investors who expected the Fed to wait until December rather than move at its October meeting. The PPI report shows why that debate is getting harder: energy was the biggest driver, but price increases also spread through food, trade margins, transportation and other services.
