Commentary Directory

US PPI: September 2023

Jacob Hess
October 11, 2023


10/11/2023 (September 2023)

+2.2% YoY (+0.5% MoM)


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Core PPI +2.8% YoY (+0.2% MoM)
Goods PPI +0.8% YoY (+0.9% MoM)
Services PPI +2.9% YoY (+0.3% MoM)

The Producer Price Index (PPI) for final demand rose by 0.5% in September, following increases of 0.7% and 0.6% in August and July respectively. On a year-over-year basis, the index advanced 2.2%, marking the largest increase since April. The uptick was led by a 0.9% rise in final demand goods, with energy prices playing a significant role. Specifically, a 3.3% surge in final demand energy prices contributed to nearly three-quarters of the overall increase in goods. On the services side, the index advanced by 0.3%, with a notable 13.9% jump in the index for deposit services. Meanwhile, prices for processed goods for intermediate demand increased by 0.5%, while unprocessed goods saw a more substantial rise of 4.0%.

From BLS

To really get to the core of the issue, we can look at a “Super Core” version of PPI which excludes energy, food, and trade services. This index increased just 0.2% MoM in September and was up 2.8% YoY, slowing from 3.0% YoY in August. Thus, in the end, we see that through the noise, producers are seeing a general trend of disinflation. This would be all fine and dandy, but the volatility in energy can’t be ignored. With new supply risks in the outlook from conflict in Israel and Gaza, which could lead to sanctions against Iranian oil, and from OPEC+ countries looking to maintain production cuts, high energy prices could be here to stay. With little volatility to the downside, this becomes an inflationary pressure that all producers have to pay attention to since energy input costs are almost universal. Suddenly, the picture becomes a lot less rosy.