Get 40% Off
🚨 Volatile Markets? Find Hidden Gems for Serious OutperformanceFind Stocks Now

U.S. Producer Prices Climb 0.6%, Adding to Inflation Concerns

Published 09/11/2021, 14:08
Updated 09/11/2021, 14:08
© Reuters.

(Bloomberg) -- Prices paid to U.S. producers accelerated in October, largely due to higher goods costs, fueling concerns about the persistence of inflationary pressures in the economy.  

The producer price index for final demand increased 0.6% from the prior month and 8.6% from a year earlier, matching forecasts, Labor Department data showed Tuesday. Excluding the volatile food and energy components, the so-called core PPI rose 0.4% and was up 6.8% from a year ago.

The report underscores how transportation bottlenecks, materials shortages and increasing labor costs have sent prices soaring across the economy in recent months. And with ongoing supply-chain challenges anticipated to linger into 2022, sustained price increases at the producer level presage additional consumer price increases in the coming months.

More than 60% of the headline increase was due to goods, which jumped 1.2%. Higher energy costs, including that for gasoline, drove the gain. The cost of services rose 0.2%.

Other data point to growing price pressures. Compensation surged by the most on record in the third quarter, and a gauge of prices paid by service providers rose to the highest level in 16 years last month. A record 32% of small-business owners said in October they plan to raise compensation in the next three months.

Companies are passing those costs onto consumers in the form of higher prices, fueling inflation further. On recent earnings calls, executives at companies including 3M (NYSE:MMM) Co., Masco Corp (NYSE:MAS). and Stanley Black & Decker Inc (NYSE:SWK). have spoken about raising prices, or plans to do so, to offset higher costs. 

3rd party Ad. Not an offer or recommendation by Investing.com. See disclosure here or remove ads .

That may be reflected in a report due Wednesday. The consumer price index is forecast to post its strongest advance on an annual basis since 1990.

‘Very Difficult’

The rapid and sustained increase in inflation has put the Federal Reserve in a challenging position. The central bank announced plans last week to begin tapering asset purchases this month, though Chair Jerome Powell noted balancing high inflation with a labor market that still needs to heal is “very difficult.”

Energy prices rose by the most since March, while the index for food prices declined for the first time in three months. 

Producer prices excluding food, energy, and trade services -- a measure often preferred by economists because it strips out the most volatile components -- rose 0.4% from the prior month. Compared with a year earlier, the gauge increased 6.2%.

(Adds graphic.)

©2021 Bloomberg L.P.

 

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.