Producer Prices See Biggest Jump in Four Years, Soaring 1.3% in September

Economists surveyed by FactSet expected PPI to rise 0.5% month over month after wholesale inflation rose 0.4% in August. (Chloe Ferreux / AFP via Getty Images)

Key Points

• The U.S. producer price index for total final demand rose 1.3% in September, the largest monthly advance since March 2022.
• The September increase brought wholesale inflation to 6.3% year over year, up from a revised 5.6% in August.
• The hotter-than-expected reading makes a stronger case for the Federal Reserve to raise interest rates at its meeting on Oct. 27-28.

Wholesale inflation was much stronger than expectations last month, posting the largest monthly advance since 2022.

The producer price index for total final demand rose 1.3% in September, translating to growth of 6.3% year over year, the Bureau of Labor Statistics reported Thursday.

The September increase is the largest advance since March 2022, the BLS reported.

That blew past expectations. Economists surveyed by FactSet expected PPI to rise 0.5% month over month after wholesale inflation rose 0.4% in August. Producer prices were up a revised 5.6% year over year in August.

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The hotter-than-expected PPI reading comes after the consumer price index also surged in September, making a stronger case for the Federal Reserve to raise interest rates at its policy meeting on Oct. 27-28.

The spike in producer prices was driven largely by a surge in energy prices, though the increase was broad-based. The index for final demand energy, however, did jump 10.8% month over month in September. Specifically, gasoline costs surged 20.3%, which drove roughly half of the September increase in the index for final demand goods.

Diesel and jet fuel costs also advanced on the month, as did residential electric power and crude petroleum

Beyond energy, fresh and dry vegetable costs also rose. In fact, the index for food was up 1.2% month over month, a big reversal from August’s decline of 0.3%.

Core PPI, which excludes food and energy, climbed 0.7% month over month in September, more than double than the consensus call for a 0.3% advance and an acceleration from August’s revised flat reading. Core producer prices rose 5% year over year, up from August’s revised 4.8% pace.

The BLS also reports a core PPI metric that excludes trade, which rose 0.5% in September and was up 5% from a year earlier.

This is breaking news. Check back for more analysis soon.

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