US September producer prices surged 1.3% compared to the previous month... Highest in 4 years and 6 months (comprehensive)

(New York = Yonhap News) Correspondent Soo-jeong Lim = The U.S. producer price index (PPI) in September rose by the largest amount in 4 years and 6 months due to the surge in energy prices due to the U.S.-Iran war.

Following the September consumer price index (CPI) announced the previous day, which exceeded expectations, producer prices also rose sharply, raising concerns that inflationary pressures in the United States are growing again.

The U.S. Department of Labor announced on the 15th (local time) that the producer price index (PPI) rose 1.3% in September compared to the previous month.

This is the highest rate of increase since March 2022 (1.7%) and significantly exceeds the expert forecast (0.6%) compiled by Dow Jones.

Compared to the same month last year, it rose 6.3%, recording the highest rate of increase since December 2022.

Core producer prices excluding highly volatile food and energy rose 0.7% from the previous month, exceeding the forecast (0.3%). Compared to the same month last year, it rose 5.0%.

Looking at producer prices by sector, product prices rose 2.6% compared to the previous month, recording the largest increase since December 2009, when related statistics began to be collected. Service prices rose 0.8%.

In the commodity sector, energy prices soared 10.8%, accounting for more than 80% of the total commodity price increase.

In particular, among energy items, gasoline prices jumped 20.3%, accounting for about half of the increase in product prices.

Food prices rose 1.2%, and prices of other goods excluding food and energy rose 0.3%.

In the service sector, transportation and warehouse service prices increased by 3.4%, and distribution service margins also increased by 1.4%.

Karl Weinberg, chief economist at High Frequency Economics, said, “Rising transportation costs affect the entire economy, from the procurement of raw materials for manufacturing to the wholesale and retail distribution of goods,” and explained, “This is how rising energy prices are transmitted to the prices of underlying goods.”

The September CPI announced the previous day rose 0.6% compared to the previous month and 3.7% compared to the same month last year.

As producer prices rise more than expected, the market's attention is also focused on the possibility that the Federal Reserve will raise interest rates further.

In particular, as some items of producer prices are reflected in the calculation of the Personal Consumption Expenditures (PCE) price index, the Federal Reserve's preferred price index, this index is expected to have an impact on future price forecasts.

However, the financial market is placing more emphasis on the possibility that the Federal Reserve will freeze the base interest rate this month despite this price index.

According to FedWatch of the Chicago Mercantile Exchange (CME), the probability that the benchmark interest rate will be raised at the Federal Open Market Committee (FOMC) meeting on the 27th and 28th was about 30%, not much different from the previous day.

U.S. Treasury yields also fell. The 10-year maturity U.S. Treasury bond interest rate was at 5.06% this morning, down 13 basis points from the previous day.

Producer prices, also called wholesale prices, are accepted as a leading indicator of consumer prices in that they are reflected in the prices of final consumer goods with a certain time lag.