Core Producer Prices Rise Less Than Expected

A closely watched barometer of inflation rose less than expected in August.

The producer price index, excluding food and energy, rose 0.2 percent last month, a slowdown from the previous month’s revised 0.3 percent increase and lower than the 0.3 percent forecast by economists.

Headline PPI rose 0.4 percent after climbing an upwardly revised 0.1 percent in July. That matched the consensus forecast. Higher fuel prices have pushed up headline PPI since the start of the war with Iran.

Compared with a year ago, the PPI is up 5.4 percent. That is higher than the previous month’s 4.8 percent year-over-year increase and slightly above the 5.3 percent consensus forecast. Core PPI is up 4.6 percent from 12 months ago, in line with expectations and above July’s 4.2 percent increase.

The producer price index measures the prices paid to American businesses for goods and services. It includes sales to consumers, households, businesses, and foreign purchasers, a broader array of customers than is measured by the consumer price index. Although it is sometimes referred to as a “wholesale” price index, it is not an index of wholesale prices. The headline figures, which come from the index for final demand, are based on sales of products to end-users rather than those that contribute to the manufacture or provision of other goods and services. It excludes import prices, since those are not paid to U.S. producers, but includes export prices, which are excluded from CPI.