US producer prices rose less than expected in September, data out Thursday showed.
The 0.5% monthly rise was a shade cooler than the 0.6% increase economists anticipated. The range, from more than four-dozen forecasters, was 0.3% to 0.9%.
YoY, the final demand index jumped 8.6% (figure below), another “largest advance since 12-month data were first calculated” moment. Still, it was below the expected 8.7%.
The data came a day after the government said the rate of core consumer price growth was steady in September, perhaps suggesting the overall pace has plateaued, albeit at an uncomfortably high level.
It’s also worth noting that inflation seems to be broadening, a sign that “transitory” may no longer be the best term even if you still doubt the dire prognostications of stagflation doomsayers.
Notably, the MoM rise in PPI was the slowest this year (orange in the figure below).
Some 80% of last month’s rise in the index for final demand was attributable to a 1.3% jump in prices for final demand goods, the largest since May. The index for final demand services rose just 0.2%.
Energy played a starring role. 40% of the advance in the goods index was due to a 2.8% increase in energy prices. The index for final demand foods rose 2.0%.
The 0.2% increase in the final demand services gauge was the ninth straight. Two-thirds of the September increase was due to margins on fuels and lubricants retailing. That said, indexes for machinery and equipment wholesaling, hospital inpatient care, cars and car parts retailing, portfolio management, and truck transportation of freight all rose too. Airfare-related prices dove nearly 17%.
Ex-food and energy, overall PPI prices rose just 0.2% from August, the slowest core print of 2021. That was less than half the expected 0.5% increase. The YoY print was 6.8%, extremely elevated, but below the 7.1% estimate.
There are innumerable ways to slice and dice the data. Generally speaking, any signs of moderation are welcome, especially to the extent they suggest supply chain disruptions might be working themselves out.
But there’s scant evidence of that. In fact, as the September FOMC minutes (not to mention countless PMI anecdotes) made clear, businesses believe various “bottlenecks” will persist indefinitely, or at least into mid-2022. Surging energy prices are yet another pernicious variable in an already convoluted calculus.
If it’s clarity you’re after, you won’t find it in the data. At least not for the foreseeable future.
