On final demand services, BLS weighed their PPI report for September 2023. It’s a sign that overall wholesale inflation is still running hotter than anticipated. The recent federal shutdown pushed back the release of the report. That’s a modest advance, indicating that producer prices rose 0.2% from October to November. This increase is a sign of a larger trend in the economy. The year-over-year rate of wholesale inflation was revised higher to 3%, up from the previously announced 2.7%.
To be sure, Producer Price Index serves an important and productive function in the economy. It’s a broad measure of the average price change for all goods and services as they leave the producer. Third, because it sometimes is a bellwether of consumer pricing trends in the coming months. After the most recent PPI data, it looks like consumers are going to start facing increased costs sooner rather than later. Wholesale prices have been skyrocketing, fueling this trend.
This follows the PPI’s 0.2% monthly increase in November. This increase follows a 0.1% September to October increase. Though still elevated, the overall annual rate of inflation has been 3%, indicating that inflationary pressures have been lingering. Just last month, we were celebrating a 12-month increase of 2.8%. That revision upward of the annual rate means that wholesale inflation has been more scorching than we’d known.
The report calls attention to the role energy prices played in the November increase being a hot one. More specifically, fluctuations in energy costs tend to ripple out through the economy, having a big impact on consumer prices and economic stability overall. In response to the BLS’s notice, watchdog BLS officials previously stated that the unexpected federal shutdown led to procedural hiccups. This meant that price update requests and submissions were lagged and the data collection process was not as comprehensive.
Analysts consider the PPI to be a leading indicator, since it offers valuable information about future consumer price trends. When wholesale prices consistently increase, it is not uncommon for retail prices to follow suit. This added cost burden can further strain household budgets already stretched thin by inflation.