Producer inflation made a comeback in September, bouncing back into positive territory after a brief summer lull. The culprit? Energy prices, which reminded everyone that they're still capable of moving the needle. Meanwhile, American consumers appear to be experiencing some spending fatigue, with retail sales figures coming in cooler than expected and adding fuel to the debate over whether the Fed will cut rates again next month.
The Producer Price Index rose 0.3% month-over-month, matching what economists anticipated and reversing August's 0.1% decline, according to data released Tuesday by the Bureau of Labor Statistics. Year-over-year, producer inflation held steady at 2.7%, suggesting inflationary pressures at the wholesale level aren't exactly disappearing.
Energy was the star of the show—or villain, depending on your perspective. Gasoline prices soared 11.8% from August to September, driving final demand goods up 0.9%, the biggest monthly jump since February. Food prices also climbed 1.1%, though goods excluding food and energy barely budged, rising just 0.2%.
Core PPI, which strips out the volatile food, energy, and trade services components, rose a modest 0.1% on the month, missing the 0.2% consensus. That's the good news. The less-great news: on a yearly basis, core PPI remained elevated at 2.9%, above the expected 2.7%.
Services inflation stayed flat in September. A 4% spike in airline ticket prices and gains in transportation services were offset by a 3.5% drop in machinery and equipment wholesaling margins, plus declines in retail margins across autos, apparel, and financial services.
