US Producer Prices Climbed by More Than Forecast in September

(Bloomberg) — Prices paid to US producers rose in September by more than expected, suggesting inflationary pressures will take time to moderate and keeping the Federal Reserve on its aggressive interest rate-hike path.

The producer price index for final demand climbed from August, the first increase in three months, and was up from a year ago, Labor Department data showed Wednesday. 

Excluding the volatile food and energy components, the so-called core PPI increased in September and advanced from a year earlier.

The median estimates in a Bloomberg survey of economists called for a 0.2% monthly increase in the PPI and a 0.3% rise in the core.

While supply chain disruptions have generally improved, costs rose for energy, foods and services. Two-thirds of the increase in the PPI was traced to services as prices for travel and accommodation, food retailing, portfolio management and hospital inpatient care.

The government’s consumer price index on Thursday is expected to show another solid advance, highlighting still-rapid and broad inflation that will probably lead Federal Reserve policy makers to boost their benchmark interest rates another 75 basis points next month.

Many companies have successfully passed on much, if not all, of the increases in input and labor costs, but it’s unclear how long they can continue to do so as consumers begin to balk at higher prices.

Wednesday’s report showed goods prices increased 0.4%, reflecting higher energy and food costs. Food prices climbed 1.2%. Excluding food and energy, the index of goods costs was unchanged.

Services prices increased 0.4%, the most in three months.

©2022 Bloomberg L.P.

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