The U.S. Producer Price Index (PPI) for final demand rose 1.3% in September, marking its largest monthly increase since March 2022, following gains of 0.5% in August and 0.2% in July. On an annual basis, producer prices increased 6.3%, the largest 12-month rise since December 2022, according to the U.S. Bureau of Labor Statistics (BLS). Core producer prices, excluding foods, energy, and trade services, advanced 0.5% for the month and 5.0% year over year, indicating continued underlying price pressures.

The monthly increase was primarily driven by energy and service costs. Final demand goods prices jumped 2.6%, their largest increase since data collection began in 2009, as energy prices surged 10.8% and gasoline prices climbed 20.3%. Final demand services prices rose 0.8%, supported by higher trade service margins and higher transportation and warehousing costs. Meanwhile, prices for intermediate-demand processed goods increased 2.5%, while unprocessed goods surged 8.4%, largely reflecting higher diesel fuel and crude petroleum prices.

Upstream inflationary pressures also intensified, with intermediate-demand processed goods prices rising 14.1% and unprocessed goods prices increasing 21.5% over the year. Intermediate-demand service costs rose 0.9% in September and 6.3% annually. These broad-based increases suggest that higher energy, transportation, and input costs could keep pressuring businesses and potentially feed through to consumer prices. Accelerating producer inflation may complicate the Federal Reserve’s efforts to bring inflation sustainably toward its 2% target.

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