Producer prices rise 8.6%, matching September record high

Inflation at the wholesale level rose 8.6% last month from a year earlier, matching September’s record annual gain and offering more evidence that inflationary pressures are not yet easing.

The Labor Department reported Tuesday that its producer price index—which measures inflation before it hits consumers—rose 0.6% last month from September, pushed higher by surging gasoline prices. Excluding volatile food and energy prices, wholesale inflation was up 0.4% in October from September and 6.8% from a year ago.

More than 60% of the September-October increase in overall producer prices was caused by a 1.2% increase in the price of wholesale goods, as opposed to services. A 6.7% jump in wholesale gasoline prices helped drive goods prices up.

Mostly dormant for decades, inflation has returned to the United States this year. The economy’s strong rebound from the 2020 coronavirus caught many businesses by surprise. Their scramble to meet unexpectedly strong demand has created shortages of labor, raw materials and goods and snarled traffic at ports and freight yards. The result has been higher prices, and the supply squeeze is expected to last at least well into 2022.

“Since the pandemic, supply chains have never been the same and likely won’t normalize for several more months,” Contingent Macro Advisors said in a research note.

On Wednesday, the Labor Department will release its consumer price index for last month. According to a survey of economists by FactSet, it is expected to show that consumer prices rose 0.5% from September and 5.8% from a year earlier—beating September’s 5.4% year-over-year gain, the fastest since 2008.

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5 thoughts on “Producer prices rise 8.6%, matching September record high

  1. It is worth noting several key things from this report.
    1. 2019 and 2020 inflation were among the lowest ever recorded, so year over year comparisons are a bit misleading.
    2. One-third of the increase in goods prices came from gasoline, with prices rising 6.7%.
    3. Beef and veal prices represented the other side of the ledger, posting a collective decline of 10.3%.
    4. On the services side, more than 80% of the increase in final demand services price increases came from autos and auto parts, which increased 8.9%.

    If you take out gasoline and auto parts, the inflation increases are much more muted and even show decreases in multiple segments.

    1. For the love of God man, give it up; prices are increasing on everything and we all know why.

    2. Lance A. – I assume you recognize that the disruption of supply chains due to the Covid pandemic are the principle cause for higher prices as demand for goods and services have increased while the ability to produce or provide adequate goods and services has decreased. Defeating Covid through an increased rate of vaccinations is the only way to bring supply-and-demand into balance and bring prices back to acceptable levels.

  2. You don’t have to be a rocket-science analyst to understand wage increases alone have caused inflation to balloon! And here is a late flashing news break for Charlie P. … You CANNOT “take out gasoline and auto parts”!! 100% of all consumers are negatively impacted by both gasoline prices and inflation over all. What planet do these people come from???

    1. I’m not arguing that increases in car prices and gasoline don’t affect people. I’m saying that they have different causes than the rest of the core inflation we are experiencing. There are reasons to look at the CPI vs Core Inflation, and vice versa. It’s an interesting topic to read up on if you aren’t already familiar.

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