WASHINGTON, Oct 15 (Reuters) – US producer prices increased by the most in 4-1/2 years in September amid rising costs for goods and services, the latest indication of inflation broadening out beyond energy products.
The Producer Price Index for final demand jumped 1.3% last month, the largest gain since in March 2022, after an upwardly revised 0.5% rise in August, the Labor Department’s Bureau of Labor Statistics said on Thursday.
Economists polled by Reuters had forecast the PPI increasing 0.5% after a previously reported 0.4% gain in August. In the 12 months through September, the PPI soared 6.3%, the biggest increase since December 2022. That followed a 5.6% advance in August. The government on Wednesday reported a broad increase in consumer prices in September, putting a Federal Reserve interest rate hike this month back on the table.
Producer goods prices increased 2.6%, the largest rise since the government started tracking the series in December 2009. A 10.8% surge in energy prices accounted for more than 80% of the broad-based rise in goods prices. Gasoline prices rose 20.3%.
There were also increases in the prices of diesel, jet fuel and residential electric power. The dragging US-Israeli war with Iran keeps oil prices elevated.
Wholesale food prices rebounded 1.2% after declining for three straight months. Excluding the volatile food and energy components, producer goods prices rose 0.3%. The so-called core goods gained 0.4% in August.
Services prices shot up 0.8% after climbing 0.2% in August. A 1.4% surge in margins for trade services accounted for nearly half of the broad-based increase in services prices.
There were also increases in the costs of transporting freight by road, hotel and motel rooms as well as airfares. But margins for automotive fuels and lubricants retailing plunged 30.3%. Prices for securities brokerage also fell.
The Federal Reserve tracks the Personal Consumption Expenditures price indexes for its 2% inflation target. Some of the PPI components feed into the calculation of the PCE inflation measures. Prior to the PPI report, economists’ estimates for core PCE inflation ranged from 0.3% to 0.4% in September, which would mean a year-over-year reading of 3.1%.
Core PCE inflation gained 0.2% in August and advanced 3.0% on a year-over-year basis.
(Reporting by Lucia Mutikani; Editing by Andrea Ricci)
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