Analysis
The producer price index tracks the prices businesses receive for what they sell, rather than what consumers pay at the register. Wholesale price moves can feed into consumer prices over time, but the two measures do not move in lockstep. In this report the energy jump drove most of the headline increase, while the measure that leaves out food, energy and trade services also rose faster than in August.
The September numbers
The Bureau of Labor Statistics reported on October 15 that the producer price index for final demand rose 1.3% in September on a seasonally adjusted basis. It had risen 0.5% in August. The September gain was the largest monthly increase since a 1.7% rise in March 2022 [1].
On an unadjusted basis, final demand prices were 6.3% higher than a year earlier. That was the largest 12-month increase since 6.4% in December 2022 [1].
Energy and goods
Prices for final demand goods rose 2.6%, the largest increase since the series began in December 2009. Final demand energy rose 10.8% and accounted for more than 80% of the goods increase [1].
Gasoline prices rose 20.3% and made up about half of the rise in goods. Final demand foods rose 1.2%, and goods excluding foods and energy rose 0.3% [1].
Services and the core measure
Prices for final demand services rose 0.8% [1].
Final demand less foods, energy and trade services, a narrower measure that strips out some of the most volatile categories, rose 0.5% in September after 0.3% in August. Its 12-month increase was 5.0% [1].
What the index measures
The producer price index measures the average change over time in the selling prices that domestic producers receive for their output. Final demand is the part of that output sold for uses such as consumption, investment, government and export. The release reports monthly changes on a seasonally adjusted basis, meaning they are smoothed for regular calendar patterns, and 12-month changes on an unadjusted basis [1].
What remains uncertain
Monthly producer price figures are often revised in later releases, and a single month's move, particularly one driven by energy, does not by itself show how prices will behave in later months.