US Producer Prices Rise Higher Than Market Forecast in August

The producer price index (PPI)—a gauge of prices businesses pay for goods and services—rose higher than expected, with most of the increase attributed to the final demand for services.
The PPI increase eased to a lower-than-expected 1.7 percent year over year, down from a revised 2.1 percent in the previous month. This is the lowest level since February 2024.
Core producer prices, which remove the volatile energy, food, and trade services components, surged by 0.3 percent, up from the 0.2 percent drop in July. The consensus estimate was a 0.2 percent gain.
On a year-over-year basis, core PPI growth was unchanged at 2.4 percent.
Goods inflation held steady while services inflation climbed by 0.4 percent.
PPI data show that prices for chicken eggs, diesel fuel, drugs and pharmaceuticals, and gasoline moved up last month. Prices for electric power, hay, hayseeds, meats, and oilseeds declined.
Cumulatively, producer prices have spiked by 26 percent since January 2021. By comparison, the consumer price index (CPI) has surged by about 20 percent in the same span.
Economists pay attention to the PPI because it is a potential indicator of future inflation trends, as it is reflected early on in the supply chain.
The latest PPI numbers follow a slowing of the annual inflation rate to a lower-than-expected 2.5 percent in August, the lowest level since February 2021.
Treasury yields were mixed, with the benchmark 10-year yield little changed at around 3.64 percent. The two-year yield dipped to 3.62 percent, while the 30-year bond picked up half a basis point to nearly 3.97 percent.
The U.S. dollar index, a measurement of the greenback against a basket of currencies, was flat at 101.70.
“A gradual rise in the US M2 Money Supply indicates a slight increase in potential inflation starting around the end of this year,” he said in a note to The Epoch Times.
“I would say the worst outcome is stagflation—recession, higher inflation,” Dimon said. “And by the way, I wouldn’t take it off the table.”
S&P Global’s Manufacturing PMI also weakened last month as prices unexpectedly increased.