Hot PPI Report: Wholesale Prices Surge Most Since 2022

The hot ppi report for September gave the Federal Reserve its clearest warning yet that inflation is far from beaten, as wholesale prices posted their biggest monthly jump in more than four years, the Bureau of Labor Statistics reported Thursday.

The producer price index for final demand rose 1.3% in September, the largest monthly advance since March 2022 and far above the 0.5%–0.6% economists had forecast. Over the past 12 months, producer prices climbed 6.3% — the fastest annual rate since December 2022, more than triple the Fed’s 2% inflation target.

Energy Costs Drove the Surge

A 10.8% monthly surge in energy prices accounted for the bulk of the increase. Gasoline costs leapt 20.3%, diesel and jet fuel also climbed, and producer goods prices rose 2.6% — the largest increase since that series began in 2009, the BLS said. Services prices jumped 0.8% as well, led by a 1.4% rise in trade margins.

Even stripping out volatile food and energy costs, underlying producer prices came in hot — the second straight day of stronger-than-expected inflation data, after Wednesday’s hotter-than-forecast consumer price report.

A Fed Rate Hike Back on the Table

The one-two punch of hot CPI and PPI has put a rate hike at the Fed’s Oct. 27–28 meeting back on the table. Traders put the chance of an October hike at roughly 34%, nearly double where it stood a week ago, with about 90% expecting at least one hike before year-end, according to CME FedWatch data cited by CNBC.

Markets reacted to the renewed inflation scare: the 10-year Treasury yield fell to about 5.05% as investors rotated into government debt, while AI and chip stocks sold off sharply and the S&P 500 and Nasdaq tracked toward their worst week since June.

Source: CNBC / Reuters