US PPI rises to 30-year high
Prices paid to producers for goods rose by the most in four months to 1.3%
According to the latest data from the US Bureau of Labor Statistics, Producer Prices in the world’s largest economy rose to 8.6% year-on-year and 0.5% on a month-on-month basis in September.
Analysts polled by The Wall Street Journal had predicted an increase of 8.7% and 0.6%, respectively.
This marginal expectation miss may be welcomed by those who believe that the runaway inflation seen in the wake of the COVID-19 crisis will prove to be transitory. Wholesale prices rose by the smallest amount since December 2020.
However, with September’s PPI figures constituting the ninth month of consecutive increases and the highest year-on-year figures in three decades, the hypothesis could be called into question. Before the global health crisis, monthly PPI averaged less than 0.2%.
Core PPI, which excludes more volatile factors, rose by 0.2% month-on-month. Although this was less than had been predicted and the smallest rise of the year thus far, its 6.8% year-on-year increase represented a record high.
Prices paid to producers for goods rose by the most in four months to 1.3%, with rising energy costs accounting for 40% of the increase. Indeed, energy prices increased by 2.8%, the largest rise since March.
The cost of services witnessed its smallest rise in three months, increasing by only 0.2%. A near 17% fall in airline passenger service prices accounted for much of this decline.
The latest figures follow on from Wednesday’s Consumer Price Index report in which prices unexpectedly rebounded to post their largest annual increase in thirteen years.
Inflation anxiety is by no means exclusive to the United States. Thursday also saw the publication of data from China finding that producer prices in the world’s second-largest economy rose by 10.7% year-on-year in September. This constituted the highest PPI print since November 1995.
At 16:00 (BST), spot gold, a traditional inflation hedge, traded 0.2% higher at $1,797 per troy ounce, a near one-month high.