WASHINGTON: Wholesale prices in the United States surged in September as producer inflation accelerated to its fastest pace in more than four years, driven largely by a sharp increase in fuel costs.
The Producer Price Index (PPI), which measures the prices businesses receive for goods and services, rose 1.3% from August, the US Labor Department reported on Thursday. The increase exceeded economists’ expectations of 0.5% and marked the largest monthly rise since March 2022.
On an annual basis, wholesale prices climbed 6.3% in September, up from 5.6% in August. This was the highest annual increase since December 2022.
Fuel Costs Drive Wholesale Inflation
Energy prices accounted for much of the monthly increase. The final-demand goods index, a broad measure of goods prices, rose 2.6% in September, marking its largest increase since the series began in December 2009.
Energy prices jumped 10.8%, their biggest rise since 2008. Gasoline prices accounted for a substantial share of the increase in goods prices, while food prices rose 1.2% after declining in August.
Inflationary pressures also spread to services. Service prices increased 0.8% during September, partly reflecting higher wholesaling margins and transportation costs.
Consumer Inflation Also Picks Up
The producer price report followed separate data released on Wednesday showing that consumer inflation had also accelerated.
The Consumer Price Index (CPI) rose 3.7% over the year through September, compared with 3.4% in the year through August. Gasoline prices increased 9.1% during September.
The simultaneous rise in producer and consumer prices could complicate the Federal Reserve’s efforts to bring inflation back to its 2% target.
Higher production costs can pass through supply chains to consumers, although businesses may absorb some of the increases rather than raising their selling prices.
Inflation Pressures Extend Beyond Energy
A measure of producer prices excluding food, energy and trade services rose 0.5% in September. It was 5% higher than a year earlier, suggesting that inflationary pressures extended beyond fuel costs.
With wholesale and consumer inflation both accelerating, policymakers face renewed pressure to keep interest rates elevated while assessing how higher energy prices may affect the broader economy.
The extent to which businesses pass these costs on to consumers will be an important factor in determining the future path of inflation.
