US producer prices post largest increase in 4-1/2 years in September

US producer prices increased by the most in 4-1/2 years ​in September amid rising costs for goods and services, ​the latest indication of inflation broadening out ‌beyond energy ​products. The Producer Price Index for final demand jumped 1.3% last month, the largest gain since in March 2022, after an upwardly revised 0.5% rise in August, ‌the Labor Department's Bureau of Labor Statistics said on Thursday.

Economists polled by Reuters had forecast the PPI increasing 0.5% after a previously reported 0.4% gain in August. In the 12 months through September, the PPI soared 6.3%, the biggest increase ‌since December 2022. That followed a 5.6% advance in August. The government on Wednesday reported a broad increase ‌in consumer prices in September, putting a Federal Reserve interest rate hike this month back on the table. Producer goods prices increased 2.6%, the largest rise since the government started tracking the series in December 2009. A 10.8% surge in energy prices accounted for more than 80% ⁠of the broad-based ​rise in goods prices. ⁠Gasoline prices rose 20.3%.

There were also increases in the prices of diesel, jet fuel and residential electric power. The dragging US-Israeli war with Iran ⁠keeps oil prices elevated. Wholesale food prices rebounded 1.2% after declining for three straight months. Excluding the volatile food and energy components, ​producer goods prices rose 0.3%. The so-called core goods gained 0.4% in August.

Services prices shot up 0.8% ⁠after climbing 0.2% in August. A 1.4% surge in margins for trade services accounted for nearly half of the broad-based increase in services prices. There ⁠were ​also increases in the costs of transporting freight by road, hotel and motel rooms as well as airfares. But margins for automotive fuels and lubricants retailing plunged 30.3%. Prices for securities brokerage also fell.

The Federal Reserve tracks ⁠the Personal Consumption Expenditures price indexes for its 2% inflation target. Some of the PPI components feed into the calculation ⁠of the PCE inflation measures. ⁠Prior to the PPI report, economists' estimates for core PCE inflation ranged from 0.3% to 0.4% in September, which would mean a year-over-year reading of 3.1%. Core PCE inflation gained ‌0.2% in August ‌and advanced 3.0% on a year-over-year basis.