A key measure of inflation at the wholesale level cooled more than economists had anticipated in August, offering a mixed picture of price pressures in the U.S. economy as energy costs continue to surge.
The producer price index excluding food and energy — the so-called core PPI — rose 0.2 percent last month, down from a revised 0.3 percent gain in July and below the 0.3 percent increase that economists had forecast, according to data reported Thursday by Breitbart News. The softer reading suggests underlying price pressures in the production pipeline may be easing slightly even as volatile energy categories push the broader index higher.
The headline PPI, which includes food and energy, rose 0.4 percent in August, matching the consensus forecast. That followed an upwardly revised 0.1 percent increase in July. Breitbart reported that higher fuel prices have been pushing up the headline index since the start of the war with Iran, a conflict that has roiled global energy markets and sent petroleum-based costs soaring.
Year-Over-Year Picture Shows Accelerating Prices
On an annual basis, the numbers look less encouraging. The overall PPI is up 5.4 percent compared with a year ago, a notable acceleration from the 4.8 percent year-over-year increase recorded the previous month. That also came in slightly above the 5.3 percent consensus forecast. Core PPI, meanwhile, is up 4.6 percent over the past 12 months, in line with expectations but above July’s 4.2 percent annual increase.
The gap between the monthly slowdown in core prices and the faster annual pace reflects the cumulative effect of price increases that have built up over the past year, particularly in energy-related categories that feed into a wide range of goods and services.
Energy Costs Surge Across the Board
Energy prices rose 4.2 percent in August compared with the previous month and are up a striking 24.4 percent over the past 12 months, according to the data. Consumer energy goods rose by a smaller 2.8 percent month-over-month and are up 20.8 percent for the year. Energy purchased by government agencies jumped 9 percent in August and is up 36.7 percent over the year, while export energy prices rose 8 percent last month and are up 40.7 percent compared with a year ago.
The most dramatic increase came in diesel fuel, which jumped 24.1 percent in August alone. Compared with a year ago, diesel prices are up a staggering 77.8 percent — a figure that carries significant implications for transportation costs, trucking, agriculture, and ultimately the price of goods on store shelves. Gasoline prices rose 4.2 percent compared with July and are up 46.5 percent from a year ago. Home heating oil soared 22.8 percent month-to-month and 89.9 percent year-over-year, a particularly sharp increase that could weigh heavily on households in the Northeast as the winter heating season approaches.
There was at least some relief on the energy front. Residential electrical power prices fell 0.5 percent in August and are up 3.2 percent from a year ago. Residential natural gas prices dipped 0.1 percent and are up 4.6 percent compared with August of last year — increases that are notably more modest than the spikes seen in transportation fuels.
Goods Prices Drive Broader Index Higher
The broad index covering goods prices rose 1.1 percent in August following two consecutive declines. More than three-fourths of that monthly rise can be attributed to energy prices, and over a third can be traced to diesel prices alone. The outsized role of diesel in the overall goods index underscores how a single fuel category can ripple through the broader inflation picture.
Transportation and warehousing costs also moved higher. Prices for the transportation and warehousing of consumer goods rose 1.7 percent, while transportation of capital equipment rose 1.8 percent. Transportation of passengers jumped 4.1 percent. Combined, transportation and warehousing prices rose 2.3 percent.
The index for services edged up just 0.1 percent in August, marking the third consecutive increase. That gain was driven almost entirely by the rise in transportation and warehousing prices. Excluding those categories, services prices were flat — a detail that suggests the services sector, which has been a persistent source of inflation pressure in recent years, may be stabilizing.
What the PPI Measures
The producer price index measures the prices paid to American businesses for goods and services. It includes sales to consumers, households, businesses, and foreign purchasers — a broader array of customers than is captured by the consumer price index. Although it is sometimes referred to as a “wholesale” price index, it is not technically an index of wholesale prices.
The headline figures come from the index for final demand and are based on sales of products to end-users rather than goods that contribute to the manufacture or provision of other goods and services. The index excludes import prices, since those are not paid to U.S. producers, but includes export prices, which are excluded from CPI.
The mixed report — softer core prices on a monthly basis but faster annual gains and continued energy surges — leaves economists and policymakers with a complicated picture as they assess the trajectory of inflation in the months ahead.
Source: www.breitbart.com — https://www.breitbart.com/economy/2026/09/10/core-producer-prices-rise-less-than-expected/