A key measure of U.S. inflation showed prices rising faster in August than the previous month, with prices of services rising sharply while prices of goods remained steady.
The Producer Price Index (PPI), a measure of final demand, rose 0.2% from the previous month, beating the expected 0.1% increase, although the previous month's figure was revised down to flat from a 0.1% increase.
Year-over-year, the PPI rose 1.7%, the smallest increase since February. The index's lowest year-over-year increase was recently in November 2023, when it rose just 0.8%. It rose 2.7% in June of this year.
Core PPI, which excludes food and energy prices, rose 0.3% in August. For the year, core PPI is up 2.4%.
Services prices rose 0.4 percent, while commodity prices were stable after rising 0.6 percent in July.
The Producer Price Index for Final Demand measures the prices received by U.S. businesses for goods and services they sell to end users, such as consumers, governments, and foreign buyers. It excludes import prices paid to foreign producers. It is often incorrectly called the “wholesale price index,” but it has no particular relationship to wholesale prices.
The government also publishes the Producer Price Index for Intermediate Demand, which measures the prices paid to businesses for goods and services sold to other businesses that process or package them for later sale to end-user customers.
The index of processed goods for intermediate demand decreased 0.1% in August, driven mainly by processed energy goods, down 0.6%, and food and feed, down 0.3%. Jet fuel prices decreased 10.6%. Excluding energy and food, prices of processed goods for intermediate demand increased 0.2%. Prices of fabricated flat steel increased 16.8%.
Unprocessed commodity prices plunged 3.7%, their biggest drop since December, with most of the decline driven by lower energy prices, particularly natural gas.
Prices of services to intermediate demand fell 0.1 percent due to lower profit margins at machinery and equipment wholesalers.
