U.S. producer inflation rose unexpectantly higher than forecast in August 0.7% month-over-month (consensus +0.2%) following a 0.3% increase in July. Prices being driven by higher fuel costs that risk tempering household spending and keeping inflation elevated. The cost of gasoline surged 20%, accounting for much of the gain. The core measure increased 0.2% month-over-month, as expected. On a year-over-year basis PPI was up 1.6% and excluding food and energy, was up 2.2%. On an annual basis, the PPI accelerated for a second month following a year-long downward trend.
The report coupled with consumer inflation data Wednesday show an underlying price measure rose more than forecast indicating the cost-of-living squeeze on US households. The recent increase in energy prices that tempers hope of further improvement in the near future.
The Federal Reserve has been on an aggressive path to reducing historically high U.S. inflation, we are a long way from the Central Bank transitory mantra.
August 2023 PPI
US PPI Highlights.
- US PPI Final Demand (M/M) Aug: 0.7% (exp 0.4%; prev 0.3%)
- US PPI Ex Food And Energy (M/M) Aug: 0.2% (exp 0.2%; prev 0.3%)
- US PPI Final Demand (Y/Y) Aug: 1.6% (exp 1.3%; prev 0.8%)
- US PPI Ex Food And Energy (Y/Y) Aug: 2.2% (exp 2.2%; prev 2.4%)
Until last month annual producer inflation eased for 11 straight months, the least since December 2020.
Where the price gains were:
- Prices for goods advanced by 2%, driven by a 10.5% surge in energy costs.
- Prices for services increased by 0.2%, primarily due to rising transportation and warehousing costs (1.4%).
Where the price losses were:
- Higher across the board as base affect wore off.
US Core PPI
US August CPI
PPI was released after consumer price data for August. Annual consumer inflation rose increased 0.6% from the prior month in August, the highest in twelve months pushed higher by gasoline prices on already strained household budgets. It was the most since inflation peaked at a four-decade high in June 2022. The cost-of-living crisis deepens as real wages continue to suffer, inflation-adjusted earnings rose 0.5% from a year earlier, a second month of decelerating earnings growth. Core CPI accelerated on a monthly basis for the first time since February, which leaves the door open to another Fed interest-rate hike this year.
From the Traders Community News Desk