U.S. Producer Prices Surge 1.3% in September, Biggest Increase in 4 1/2 Years

Up 6.3% year over year
Gasoline prices up 20.3%; energy prices up 10.8%

U.S. producer prices in September rose far more than expected as energy prices surged amid the war in the Middle East. After consumer prices, producer prices also posted a sharp increase, stoking concerns that inflationary pressures in the United States are building again.

The Bureau of Labor Statistics (BLS), part of the U.S. Department of Labor, said on the 15th (local time) that the Producer Price Index (PPI) rose 1.3% in September from the previous month. That was 0.7 percentage points above the 0.6% forecast by economists surveyed by Dow Jones. The monthly increase was the largest since a 1.7% rise in March 2022. Prices rose 0.5% in August and 0.2% in July.

A worker stocks merchandise at a supermarket in New York. New York (U.S.) = Hwang Yunju, correspondent.

The index rose 6.3% from a year earlier. That exceeded the market forecast of 5.5% and was the highest level since a 6.4% increase in December 2022. It was also 0.7 percentage points higher than the 5.6% increase in August.

Energy prices drove the increase in producer prices. Prices for final-demand goods rose 2.6% in September from the previous month, the largest increase since the series began in December 2009. Energy prices surged 10.8%.

Gasoline prices in particular jumped 20.3% from the previous month. Gasoline accounted for about half of the increase in goods prices, while diesel, jet fuel, and crude oil prices also rose. The increase in international energy prices amid the war in the Middle East appears to have been reflected in prices at the U.S. production stage.

Service prices also rose 0.8% from the previous month. Prices for transportation and warehousing services increased 3.4%, while trade service margins widened 1.4%. Price pressures were evident not only in energy but also in the services sector.

Producer prices excluding food, energy, and trade services rose 0.5% from the previous month, exceeding the market forecast of 0.3%. The year-over-year increase was 5.0%. Even measures excluding energy prices showed gains above market expectations.

The report followed the September Consumer Price Index (CPI) data released the previous day. The CPI rose 3.7% from a year earlier, exceeding the market forecast of 3.6%. With consumer and producer prices both posting increases above expectations, concerns are growing that the slowdown in inflation could be delayed.

The PPI measures the prices businesses receive for selling goods and services and can affect consumer prices after a certain lag. If rising energy prices spread to other goods and services, they could weigh on price stability. Attention is therefore focused on the inflation outlook and the U.S. Federal Reserve's (Fed) monetary policy decisions.

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