September Producer Prices Rose Sharply as Energy Costs Climbed

What happened to producer prices in September?

The producer price index, or PPI, rose 1.3% in September from the month before. Compared with September a year earlier, it was up 6.3%. The index tracks prices received by producers and sellers, rather than the prices shoppers pay directly at stores. ²

Both figures were higher than the estimates cited in the report. Economists surveyed by Dow Jones had expected a monthly increase of 0.6% and a yearly increase of 5.5%. The report says September’s monthly rise was the largest since March 2022, while the annual increase was the largest since December 2022. ²

A year-over-year comparison measures the change from the same month in the previous year. It describes what prices have done over that period; it does not predict what they will do next.

What drove the increase?

Energy prices were a major source of the increase. The report attributed the rise to a reduction in oil supply during conflict in the Middle East, which pushed energy costs higher. The sources provided do not give enough detail to calculate exactly how much of the total increase came from each energy product. ²

Diesel costs may also help explain changes in some goods prices. The Bureau of Labor Statistics said that diesel price increases accounted for almost half of the September rise in a category covering processed goods intended for immediate use. That finding concerns that particular category; it does not mean diesel accounted for half of the full PPI increase. ²

Does this mean shoppers will pay more?

It is possible that higher costs for fuel and other inputs could add pressure on businesses. A business might raise its prices, absorb some of the extra expense, or make other changes. The September report does not show what individual businesses chose to do.

Producer prices are not the same as consumer prices. The PPI measures prices earlier in the supply chain, while a consumer price index measures prices paid by households. A rise in producer costs therefore does not translate automatically into an equal increase at the checkout, or into an increase at a particular time.

The report is a sign that cost pressures were strong in September. It cannot, on its own, tell shoppers whether particular products will become more expensive or how household budgets may be affected. The ABC account also described rising prices as a challenge for consumers, but the supplied text does not include more detailed figures about future retail prices. ¹²

What does the core measure tell us?

Core PPI leaves out food and energy, whose prices can move sharply. In September, that measure rose 0.7% from the previous month and 5% from a year earlier. ²

Those figures show that the increase was not confined to the overall index’s energy component. But the information provided does not break down all the other categories, so it cannot explain exactly what drove each part of the core measure. Core PPI is one way to examine price movements without food and energy; it is not a direct measure of the cost of living for a household.

What is still uncertain?

The report gives a picture of producer prices in September, not a forecast. It does not say how long energy costs will remain elevated, how businesses will respond, or how much of any extra cost they may eventually charge customers.

Readers seeking updates can check later releases from the Bureau of Labor Statistics, including producer and consumer price data. New figures may show whether the September increase continued, eased, or had a clearer effect on prices paid by households. The sources provided here do not establish what happened in later months.