August Producer Prices Surge on Energy Costs, Stoking Inflation Fears

The U.S. Labor Department has released its reading on wholesale inflation, which the investing community reviews to see where consumer inflation will be a month or two out. The Producer Price Index for the month of August came in at +1.7% on the headline number. The core reading, ex-food and energy, came in at +0.2%.

Bloomberg was calling for estimates of +1.4% on the headline PPI and was calling for +0.2% on the core PPI reading. Dow Jones had estimates of +1.0% on the headline PPI reading and +0.1%% on the core-PPI reading.

Today’s numbers were a large gain compared to recent reports, but the report was influenced by more than 6% gains in energy prices. Gasoline prices rose in the double-digits and wholesale energy prices rose for the first time since February.

With the recent rise in oil and energy prices, as well as the drought’s impact on food and feedstocks in many parts of the United States, today’s data is just that much more important. It is also some of the last data ahead of today’s FOMC announcement regarding interest rate policy and whether more quantitative easing measures will be announced.

JON C. OGG