PPI inflation report August 2023:

A shopper peruses the meats section of a grocery store on September 12, 2023 in Los Angeles, California. 

Mario Tama | Getty Images

Inflation at the wholesale level rose more than expected in August, countering recent data showing that price increases have tempered lately.

The producer price index, a measure of what producers get for their goods and services, increased a seasonally adjusted 0.7% in August and 1.6% on a year-over-year basis, the U.S. Department of Labor reported. That monthly gain was above the Dow Jones estimate for a 0.4% increase.

However, excluding food and energy, PPI increased 0.2%, in line with the estimate. Excluding food, energy and trade services, PPI increased 0.3%.

The data comes a day after the more closely followed consumer price index showed an increase of 0.6% on a monthly basis and 3.7% from a year ago. Excluding food and energy, core CPI rose 0.3% and 4.3% respectively.

As with the CPI, the upward pressure on the PPI came largely from a big jump in energy prices. The PPI energy index jumped 10.5% on the month, spurred by a 20% surge in gasoline.

Final demand goods prices rose 2% in August, the biggest one-month gain since June 2022. Services prices increased 0.2%.

In other economic news Thursday, the Commerce Department estimated that retail sales increased a higher-than-expected 0.6% in August, well above the Dow Jones estimate for a 0.1% increase. Excluding autos, sales also rose 0.6% against the 0.4% estimate.

Those numbers are not adjusted for inflation, indicating that consumers continue to hold up well despite rising prices and increasing levels of credit card debt.

Markets took both reports in stride, with futures tied to the Dow Jones Industrial Average up about 80 points heading into the open. Treasury yields were slightly higher across the board.

PPI focuses on domestic prices and generally represents the cost of producing goods and services. By contrast, CPI gauges what consumers pay in the marketplace and includes import prices.

Both gauges are showing that while inflation remains a problem for U.S. households, the rate of increase generally had appeared to be slowing in recent months. That’s been an important consideration for the Fed as it plots its future course after a series of 11 interest rate increases totaling 5.25 percentage points.

Market pricing indicates a near-certainty that the Fed will not raise benchmark rates next week. Though Fed officials in June indicated they expect one more rate hike before the end of the year, market futures on Thursday morning pointed to a 42% chance of a move in November, according to CME Group data.

This is breaking news. Please check back here for updates.

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