U.S. Producer Prices Jump 1.3% In September, Much More Than Expected

(RTTNews) - Following yesterday's report on consumer price inflation, the Labor Department released a separate report on Thursday showing producer prices in the U.S. shot up by much more than expected in the month of September.

The Labor Department said its producer price index for final demand jumped by 1.3 in September after rising by an upwardly revised 0.5 percent in August.

Economists had expected producer prices to climb by 0.5 percent compared to the 0.4 percent increase originally reported for the previous month.

The report also said the annual rate of growth by producer prices surged to 6.3 percent in September from an upwardly revised 5.6 percent in August.

The annual rate of growth was expected to hold steady at the 5.4 percent originally reported for the previous month.

The bigger than expected increase in producer prices largely reflected a continued spike in energy prices, which soared by 10.8 percent in September after surging by 4.5 percent in August.

The report also showed a notable rebound in food prices, which jumped by 1.2 percent in September after falling by 0.3 percent in August.

The Labor Department also said prices for services increased by 0.8 percent in September after rising by 0.2 percent in August.

Prices for transportation and warehousing services shot up by 3.4 percent, prices for trade services jumped by 1.4 percent and prices for other services rose by 0.3 percent.

The report also said core producer prices, which exclude prices for food, energy and trade services, climbed by 0.5 percent in September following a 0.3 percent increase in August.

The annual rate of growth by core producer prices accelerated to 5.0 percent in September from 4.8 percent in August.

"Looking ahead, inflation is likely to firm over the next couple of months, led high by energy prices and with reinforcement from the AI buildout, strong economic growth and limited supply," said Nationwide Financial Market Economist Oren Klachkin.

"Assuming prices don't continue to climb, the energy price shock will drop out of the calculation next year," he added. "But the fundamentals aren't lining up for inflation to rapidly return to the pre-pandemic run rate."

On Wednesday, the Labor Department released a separate report showing consumer prices in the U.S. grew in line with estimates in the month of September, although it also showed a bigger than expected increase in core consumer prices, which exclude food and energy prices.

The report said consumer prices climbed by 0.6 percent in September after rising by 0.4 percent in August. The increase in prices matched economist estimates.

The Labor Department also said the annual rate of consumer price growth jumped to 3.7 percent in September from 3.4 percent in August, which was also in line with expectations.

Meanwhile, the report said core consumer prices, which exclude food and energy prices, rose by 0.3 percent for the second straight month. Economists had expected core prices to edge up by 0.2 percent.

The annual rate of core consumer price growth accelerated to 2.6 percent in September from 2.4 percent in August, coming in slightly above economist estimates for 2.5 percent growth.