September Producer Price Index Up 0.4%

The Producer Price Index, a key measure of wholesale inflation, rose by 0.4 percent in September after falling in August and July, the Bureau of Labor Statistics reported on Wednesday.

Producer prices—which producers charge for their goods and services—rose by 8.5 percent year over year, down from 8.7 percent in August.

BLS reported two-thirds of the increase in the index for final demand can be traced to a 0.4-percent rise in prices for final demand services. The index for final demand goods also advanced 0.4 percent. Prices for final demand less foods, energy, and trade services advanced 0.4 percent in September, the largest rise since increasing 0.5 percent in May. For the 12 months ended in September, the index for final demand less foods, energy, and trade services moved up 5.6 percent.

“The September Producer Price Index offers the latest evidence that inflation pressures are subsiding, but that there remains significant ground to cover in returning inflation to a more palatable level, and that the path will bear some curves,” said Sarah House, Senior Economist with Wells Fargo Economics, Charlotte, N.C. “September’s unexpected strength can be traced to a 0.6% increase in core services. However, the prospect for disinflation in the goods sector remains intact. Transportation and warehousing costs fell for a third consecutive month, trade services margins were little changed and intermediate costs continue to trend lower.”

House said the 0.4% rise in PPI for final demand in September “underscores that significant relief on the inflation front is not yet upon us.”

The other key measure of inflation, the Consumer Price Index, comes out this morning.