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Tipsheet

Another Inflation Metric Just Smashed Through Predictions

AP Photo/Evan Vucci

The Producer Price Index, which measures inflation upstream from consumers, registered another month of increased prices in September in what is more bad news for the Biden administration's attempt to get any modicum of positive economic news before November's midterms. 

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Headline PPI inflation showed prices increasing 0.4 percent in September, double the 0.2 percent economists predicted for a 12-month increase of 8.5 percent, a rate that also surpassed Wall Street estimates. What's more, the month-over-month number shows that cost increases are accelerating for producers, with final demand services advancing 0.4 percent in September after increasing 0.3 percent in August. 

According to the Bureau of Labor Statistics, here's where the numbers moved:

In September, two-thirds of the increase in the index for final demand can be traced to a 0.4-percent rise in prices for final demand services. The index for final demand goods also advanced 0.4 percent.

Prices for final demand less foods, energy, and trade services advanced 0.4 percent in September, the largest rise since increasing 0.5 percent in May. For the 12 months ended in September, the index for final demand less foods, energy, and trade services moved up 5.6 percent.

Prices for final demand services advanced 0.4 percent in September after climbing 0.3 percent in August. Most of the September increase is attributable to a 0.6-percent rise in the index for final demand services less trade, transportation, and warehousing. Margins for final demand trade services edged up 0.1 percent. (Trade indexes measure changes in margins received by wholesalers and retailers.) Conversely, prices for final demand transportation and warehousing services fell 0.2 percent.

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That is, producer inflation has not peaked and the Biden administration's frequent bragging about its work to attack or bring down inflation is just bluster that hasn't done anything to ease burdens on American companies. 

What's more, the increased and apparently accelerating prices for producers is likely to make the already hawkish Federal Reserve even more aggressive in its rate hikes aimed at bringing inflation down to Chairman Jerome Powell's target of 2 percent — rate increases that Powell has admitted will bring more economic hardship for the U.S. and more pain for Americans. 

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