PPI Jumps Due To Hurricane Energy Impact

The Producer Price Index for final demand advanced 0.4 percent in September, seasonally adjusted, the U.S. Bureau of Labor Statistics reported today. Final demand prices moved up 0.2 percent in August and edged down 0.1 percent in July.

The Econoday consensus expected this jump due to hurricane impacts.

A rebound for services and also hurricane-related increases in energy prices fed an as-expected 0.4 percent gain in producer prices for September. When excluding food and energy and also trade services, the gain moderates to only 0.2 percent which is also expected.

Energy prices at the producer level jumped 3.4 percent in the month following August's 3.3 percent spike in what the Labor Departments says is a clear hurricane effect. Food prices are not showing any effects from the hurricanes, unchanged following a 1.3 percent decline in August. Excluding food and energy, September's producer prices rose 0.4 percent which is higher than expected and reflects pressure in services.

Trade services jumped 0.8 percent in the month but follow no change in August and a 0.2 percent decline in July. Taking the 3 months together, wholesale pressures for services look moderate.

And also moderate but showing some lift are year-on-year rates, at 2.6 percent overall for a 2 tenths gain and 2.1 percent less food, energy & trade services which is also up 2 tenths. Today's report doesn't represent an upward shift for the nation's inflation picture but is favorable and will offers some support for Federal Reserve policymakers who see inflation gradually trending higher.

The hurricanes make it difficult to determine if anything price-related has really changed. The consesus is the effect is temporary, and I agree with the consensus.

Mike "Mish" Shedlock

false