Rising Energy Costs Lift Wholesale Inflation to 2.7%

U.S. producer prices rebounded in September as the cost of energy goods surged and producers passed on some tariffs.

The Producer Price Index for final demand increased 0.3% after an unrevised 0.1% drop in August, the Labor Department's Bureau of Labor Statistics said on Tuesday. Economists polled by Reuters had forecast the PPI would rebound 0.3%.

In the 12 months through September, the PPI increased 2.7% after advancing by the same margin in August. The report was delayed by the 43-day shutdown of the government.

Producer goods prices jumped 0.9%, the largest gain since February 2024, after climbing 0.2% in August. Energy goods, which accelerated 3.5%, accounted for two-thirds of the increase in goods prices.

Wholesale services prices were unchanged after falling 0.3% in August, when trade margins were compressed. The decline in trade margins had suggested that wholesalers were absorbing some of President Donald Trump's sweeping tariffs on imported goods.

That has largely resulted in moderate consumer prices, though the cost of some goods at the supermarket, including beef, coffee and bananas, has surged.

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Economists expect the pass-through from import duties will lift inflation in the months ahead. Several surveys, including the S&P Global PMIs, have shown U.S. businesses continued to pay higher prices for inputs as well as ask higher prices for their products in November.

The government reported in October that the consumer price index rose 0.3% in September after climbing 0.4% in August.

That CPI report was published despite the data blackout in order to assist the Social Security Administration with calculating its 2026 cost-of-living adjustment for millions of retirees and other benefits recipients.

The odds of another interest rate cut from the Federal Reserve in December have risen, despite concerns among some U.S. central bank officials about inflation.