A key measure of U.S. inflation showed prices rising at a faster price in August than they did in the prior month, with services prices rising swiftly even while goods prices remained flat.
The producer price index (PPI) for final demand rose by 0.2 percent from a month earlier, faster than the 0.1 percent increases expected. The prior month’s reading, however, was revised down from a 0.1 percent increase to a flat reading.
Compared with a year ago, the PPI was up 1.7 percent, the smallest increase since February. The recent lowest year-over-year increase for the index occurred in November 2023, when just 0.8 percent. In June of this year, it was up 2.7 percent.
Core PPI, which excludes food and energy prices, climbed 0.3 percent in August. For the year, core PPI is up 2.4 percent.
Services prices climbed 0.4 percent and goods prices were unchanged after jumping 0.6 percent in July.
The producer price index for final demand measures prices received by U.S. businesses for goods and services sold to their end users, such as consumers, government, and foreign buyers. It excludes import prices paid to foreign producers. It is often mistakenly called a “wholesale price index” but it has no particular connection to wholesale prices.
The government also releases a producer price indexes for intermediate demand, which measures prices paid to businesses for goods and services sold to other businesses to be processed or packaged for later sale to final-demand customers.
The index for processed goods for intermediate demand fell by 0.1 percent in August. This was led by a 0.6 decrease in processed energy goods and a 0.3 percent decline in food and feed. The price of jet fuel dropped 10.6 percent. Excluding energy and food, processed goods for intermediate demand saw prices inch up 0.2 percent. The price of fabricated steel plate jumped 16.8 percent.
Unprocessed goods prices plunged 3.7 percent, the biggest drop since December. Most of the decline was driven by falling energy prices, especially natural gas.
Prices for services for intermediate demand edged down 0.1 percent, driven by smaller margins for wholesalers in machinery and equipment.
