The August Producer Price Index for final demand increased 0.7% month-over-month (consensus 0.4%) following a 0.3% increase in July.
The index for final demand, excluding food and energy, increased 0.2% month-over-month, as expected. On a year-over-year basis, the index for final demand was up 1.6% and the index for final demand, excluding food and energy, was up 2.2%.
The key takeaway from the report is that 80% of the rise in final demand prices was attributed to a 2.0% jump in the index for final demand goods, which was driven by a 10.5% increase in prices fir final demand energy. That understanding softens the blow of the headline surprise for the index for final demand; however, until energy prices back down, concerns about rising inflation expectations and the Fed holding higher for longer will persist.