Optencis
US producer prices rose 1.3% in September compared with August, according to data from the Bureau of Labor Statistics published on Thursday 15 October. It was the largest monthly increase since March 2022 and more than twice the 0.6% that markets expected. Compared with a year earlier, producer prices were up 6.3%.
What was released
The US Bureau of Labor Statistics published its producer price index (PPI) for September on Thursday 15 October at 12:30 UTC. The PPI tracks the prices that businesses receive for what they sell, so it is often seen as an early signal of cost pressures in the economy. Both Reuters and Bloomberg reported that the monthly rise was the strongest in more than four years.
The figures
Headline producer prices rose 1.3% month on month in September. The economic calendar forecast was 0.6%, and the previous reading for August was 0.4%. On a year on year basis, prices were up 6.3%, according to Bloomberg. The calendar also listed a forecast of 0.3% for core PPI, which excludes some of the most volatile items, after 0.2% the month before; the actual core figure was not given in the sources we reviewed. Bloomberg linked the jump to higher energy costs feeding through the US economy.
- 1Higher energy costsSpreading through the US economy
- 2Producer prices jumpUp 1.3% in September
- 3Inflation pressure watchedFed rate outlook in focus
Why it matters
Producer prices matter because businesses facing higher costs may pass part of them on to consumers over time, which can push up consumer inflation. Inflation is a key input for the US Federal Reserve (Fed) when it sets its policy rate, the interest rate that influences borrowing costs across the economy. A reading this far above forecast therefore draws attention from traders who follow the US dollar, US stock indices and gold. Comments reported by Bloomberg on the day showed how economists and strategists were reading the data.
She described the US economy as lopsided, with inflation running hot while wages fail to keep pace.
She does not expect the Fed to raise interest rates at its next meeting, despite the stronger producer price data.
Views reported by the sources, not Optencis opinions.
What to watch next
The first point to follow is energy prices, since they were described as the main driver of the September increase. The next Fed meeting is also in focus, as policymakers weigh this data alongside other indicators. Upcoming inflation releases will help show whether higher costs for producers are reaching consumers. We will cover these releases as they come out.
