US producer prices rose 1.3% in September, taking the annual rate to 6.3%, the highest since December 2022 and a full point above the 5.3% consensus forecast. The Bureau of Labor Statistics (BLS) published the PPI at 12:30 GMT today alongside retail sales from the Census Bureau and the Empire State manufacturing survey, and all three beat consensus. The dollar was lower on the day regardless: EUR/USD traded at 1.1216 at 13:36 GMT, up 21 pips, or 0.19%, from yesterday’s close of 1.1195, within a day range of 1.1157 to 1.1244.
The PPI for final demand rose 1.3% on the month against a consensus of 0.5% and August’s 0.5%. That is the largest monthly rise since March 2022, when it was 1.7%. The unadjusted annual rate of 6.3% compares with a consensus of 5.3% and an August rate revised to 5.6%. The last higher annual reading was 6.4% in December 2022.
Energy drove it. According to the BLS, final demand energy rose 10.8% and accounted for over 80% of the broad rise, with gasoline up 20.3%. Goods prices rose 2.6%, the largest increase since December 2009, while services rose 0.8%. The core measure, which excludes foods, energy and trade, rose 0.5% on the month and 5.0% on the year.
| Indicator | Actual | Consensus | Prior |
|---|---|---|---|
| PPI final demand, y/y | 6.3% | 5.3% | 5.6% (revised) |
| Retail sales, m/m | 0.8% | 0.3% | 1.3% (revised from 1.1%) |
| Empire State, October | 25.5 | 10.25 | 7.6 |
Retail sales rose 0.8% in September against a consensus of 0.3%, but that sits below August’s figure, which was revised up to 1.3% from 1.1%. Excluding autos, sales rose 0.9% against 0.5% expected. The control group rose only 0.1% against 0.3% expected, and gasoline stations accounted for most of the rise in sales.
The Empire State manufacturing index rose to 25.5 in October from 7.6 in September, against a consensus of 10.25. It is the highest reading since December 2021, and the new orders component stood at 23.2.
The data keeps the inflation pipeline hot ahead of the Federal Reserve’s decision. The target range is 3.75% to 4.00%, and a strong PPI leaves a hike on the table, though the energy concentration and the soft control group make the breadth narrower than the headline. Commerzbank’s Antje Praefcke said earlier today that stronger US inflation had revived October hike pricing, while Commerzbank itself expects no move until December.
The dollar was softer elsewhere too. USD/JPY traded at 157.65 at 13:37 GMT, down 0.42% from 158.33, and GBP/USD was at 1.3252 at 13.36 GMT, up 0.16% from 1.3230.
The Fed announces its decision on 28 October at 18:00 GMT.
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