U.S. producer prices rose in September as the price of gasoline recorded its biggest increase in more than two years amid production disruptions at oil refineries in Texas caused by Hurricane Harvey.
The Labor Department said Thursday that its producer price index for final demand increased 0.4 percent last month after rising 0.2 percent in August. In the 12 months through September, the PPI jumped 2.6 percent. That was the biggest gain since February 2012 and followed a 2.4 percent jump in August. The PPI measures inflation pressures before they reach the consumer.
Wholesale gasoline prices soared 10.9 percent in September after increasing 9.5 percent in August. The increase was the largest since May 2015 and accounted for two-thirds of the 0.7 percent rise in the price of goods. The Labor Department said higher energy prices were likely the result of “reduced refining capacity in the Gulf Coast area due to Hurricane Harvey.”
It said Harvey and Hurricane Irma, which devastated Florida, had “virtually” no impact on the collection of PPI data or survey response rates.
Economists had forecast the PPI gaining 0.4 percent last month and accelerating 2.5 percent from a year ago.
Harvey and Irma, which struck in late August and early September, caused the economy to shed jobs last month for the first time in seven years. The storms have also restrained consumer spending and undercut industrial production, homebuilding and home sales.
Last month’s gasoline-driven surge in the PPI is likely to be temporary amid ample crude oil supplies.
A key gauge of underlying producer price pressures that excludes food, energy and trade services rose 0.2 percent last month after a similar increase in August. The so-called core PPI increased 2.1 percent in the 12 months through September after climbing 1.9 percent in August.
Inflation has remained relatively low, with the main measure tracked by the Federal Reserve retreating further below the U.S. central bank’s 2 percent target in August. Price pressures remain benign despite the labor market nearing full employment.
Last month, food prices were unchanged after falling 1.3 percent in August. Core goods gained 0.3 percent after rising 0.2 percent in the prior month.
The cost of services increased 0.4 percent, driven by a rise in margins for final demand trade services, a measurement of changes in margins received by wholesalers and retailers. Services edged up 0.1 percent in August.
The cost of healthcare services was unchanged after advancing 0.3 percent in August. Those costs feed into the Fed’s preferred inflation measure, the personal consumption expenditures (PCE) price index excluding food and energy.
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