U.S. Producer Prices Cool but Energy Costs Still High

U.S. producer prices (PPI) increased more than expected in September, but underlying inflation pressures are not as strong. Again, energy costs drove the PPI up 0.5 percent for the month, down from 0.8 percent in August. The core PPI, which excludes food, energy, and trade services components, increased by 0.2 percent in September, consistent with the previous month’s gain. On a year-on-year basis, core PPI  increased by 2.8 percent in September, slightly lower than the 2.9 percent increase in August. 

Gasoline rose 5.4 percent, comprising over 40 percent of the increase in the cost of goods. Food prices rebounded 0.9 percent,  while prices for fresh and dry vegetables declined.

Released monthly by the Labor Department, the producer price index measures the average change over time in the selling prices received by domestic producers for their output. The prices included in the PPI are from the first commercial transaction for many products and some services. The Federal Reserve is closely monitoring these trends to determine its future monetary policy decisions, made more complicated by recent geopolitical events.

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