The Bureau of Labor Statistics (BLS) reported Tuesday that core wholesale prices rose less than anticipated in September, suggesting a possible moderation in pipeline inflation.
This development offers some clarity as policymakers prepare to meet amid divergent views on interest rate strategy.
The producer price index (PPI), which tracks prices received by domestic producers for their output, saw a modest increase of 0.3% month-over-month on a seasonally adjusted basis, matching the consensus estimate.
However, the core index, which filters out the volatile food and energy sectors, increased by just 0.1%, falling below the 0.2% forecast.
Both the core and headline PPI had registered a 0.1% decrease in August. Year-over-year, the headline PPI was up 2.9%, while the core index rose 2.6%.
Goods prices were the primary driver of the increase
Amid an environment marked by tariff-driven cost pressures on imports, prices for final-demand goods were the primary driver behind the September PPI rise, jumping 0.9% for the month.
This represented the largest monthly surge in goods prices since February 2024, according to BLS data. In contrast, services prices remained flat.
A significant increase in energy costs fuelled the overall rise in goods prices, with final-demand energy prices jumping 3.5% in September.
Gasoline was a major factor in this surge, climbing 11.8%. Food prices also rose, increasing 1.1% on the month.
On the services side, transportation and warehousing costs increased by 0.8%.
Consumers also faced higher costs for air travel, as airline passenger fees surged 4% for the month.
Government shutdown led to delayed data release
The release of the September PPI data, along with several other key official reports, was delayed due to the government shutdown.
The BLS has indicated that it may be unable to release October PPI data, having already canceled the October consumer price index (CPI) report.
The next scheduled CPI report, for November, is due out on December 18. The PPI release is typically timed closely to the CPI.
Retail sales were slightly softer than anticipated
In related economic news also released Tuesday, the Census Bureau reported that September retail sales increased 0.2%, slightly below the 0.3% forecast.
However, sales excluding automobiles were up 0.3%, aligning with estimates.
Miscellaneous retailers recorded a strong 2.9% monthly increase, and sales at gas stations rose 2% due to higher prices at the pump.
Conversely, sales at sporting goods, hobby, and music stores saw a 2.5% decline, and online sales were down 0.7%.
An encouraging sign for discretionary spending came from eating and drinking establishments, which saw a solid 0.7% monthly increase and a 6.7% rise from a year ago.
Overall retail sales, adjusted for seasonality but not inflation, were up 4.3% from a year ago, outpacing the 3% CPI rate for September.
September inflation data to inform December fed meeting
The newly released wholesale-inflation figures will allow analysts to refine their estimates for the Personal Consumption Expenditures (PCE) inflation figure for September.
Those refined estimates are expected to be released mid-morning on Tuesday, while the official PCE inflation report is scheduled for Friday, December 5, according to the Commerce Department.
Although the September inflation data will be nearly three months old when the Federal Reserve meets on December 9–10, they will constitute the most recent official inflation picture available to policymakers.
The Fed will weigh this data as officials appear divided on the appropriate path for interest rates—whether to approve a third consecutive quarter-point rate cut to support a slowing labour market or to hold rates steady to further counter persistent inflation.
The Labor Department has noted that some economic data, such as last month’s unemployment rate and consumer-inflation numbers, cannot be compiled retroactively as they rely on contemporaneous surveys.
October job-creation statistics are expected next month, though not until after the December Federal Reserve meeting concludes.
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