Producer prices see largest rise in four years: BLS

Producer prices rose by 1.3 percent from August to September, the largest jump in more than four years, according to data from the Bureau of Labor Statistics (BLS).

September’s increase, as measured by the producer price index (PPI), is the largest since producer prices rose by 1.7 percent from February to March 2022. That spike in producer prices occurred months before inflation hit a 40-year high .

Producer costs were also up 6.3 percent year over year in September, the largest annual increase since December 2022, according to the BLS data. Wholesale prices also increased by 0.5 percent from July to August and 0.2 percent from June to July.

September’s hot reading also surpassed the expectations of economists — experts surveyed by The Wall Street Journal projected monthly and annual PPI increases of 0.6 percent and 5.5 percent, respectively.

Spikes in energy costs accounted for more than 80 percent of September’s increase in producer prices. The PPI for energy rose by 10.8 percent from August.

The energy industry remains hampered by spillover effects from the Iran war , as the Islamic Republic has restricted shipping in the crucial Strait of Hormuz. West Texas Intermediate crude oil, the North American benchmark, was trading at more than $96 per barrel as of Thursday morning.

Oil prices also increased after the Iran-backed Houthis launched deadly attacks on airports in Saudi Arabia in recent days.

The latest PPI data came in a day after the BLS reported that annual inflation was 3.7 percent in September , as measured by the consumer price index (CPI). That marked the largest year-over-year spike in consumer prices since May, when CPI inflation was 4.2 percent.

Gas price increases accounted for more than half of the increase in consumer prices from August to September, the numbers show.

The CPI and PPI reports indicate inflation is not on the way down toward the Federal Reserve’s 2 percent target. Central bank officials will gather later this month to decide whether to hike interest rates for a second-straight meeting.

Heather Long, the chief economist at Navy Federal Credit Union, said Thursday it is “inevitable” that companies will pass on elevated costs to consumers.

“It’s yet another reason this fight against inflation is likely to be longer than anyone wants,” Long wrote on social platform X .