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Producer Prices: Core up to 2.2%, Higher Than Expected

October 12, 2017
Bottom Line: Producer inflation jumped in September. Energy prices continue to drive the headline, rising 3.4% after surging 3.3% in August, while final demand services rose as well. Core prices rose moderately, more than expected, now up 2.2% on a year-over-year basis. Much of the increase in final demand services on the month was attributed to increased margins for machinery, equipment, parts, and wholesale supplies. Overall, while some of the headline increase can be attributed to increased gasoline prices amid two hurricanes, the trend in producer prices is still rising modestly. Additionally, the BLS reported that there was no impact from the hurricanes on their collection efforts or survey response rates.

The PPI ROSE by 0.4% in September, compared with market expectations for an increase of 0.4%. Overall producer prices are 2.5% ABOVE the year ago level.

The Goods PPI ROSE by 0.7% in September and is now 3.3% ABOVE its year ago level. Food prices were unchanged but are now 1.2% ABOVE their year ago level. Meanwhile energy prices rose by 3.4%. and are now 10.6% ABOVE their year ago level. The Goods PPI less food and energy ROSE by 0.3%, and is now 2.2% ABOVE its year ago level.

The Services PPI ROSE by 0.4% in September and is now 2.1% ABOVE its year ago level.

The Core PPI ROSE by 0.4%, compared with market expectations for a increase of 0.2%. Core producer prices are now 2.2% ABOVE their year ago level.