Will PPI YoY be 5.9% or more in September?

Analysis

The Bureau of Labor Statistics reported on September 10 that unadjusted final demand prices rose 5.4 percent in the 12 months ended in August. That was up from 4.8 percent in July. Getting to 5.9 percent for September would take another jump of roughly half a point, and that is the main reason the forecast leans against it. The August jump had a clear source. Final demand goods prices advanced 1.1 percent in the month, while services rose only 0.1 percent. A goods-led surge like that is the sort of thing that can fade, and the evidence gives no sign that it will repeat at the same size. The underlying trend looks firm but not explosive. Final demand less foods, energy and trade services rose 0.3 percent in August after 0.4 percent in July, and ran at 4.7 percent over twelve months. That is below the headline figure and well short of the threshold, though it is not the series that counts here. Recent monthly history is mixed. Final demand prices rose 0.1 percent in July and fell 0.1 percent in June, so one strong month does not make a trend. The supplied research includes no forecast for September itself, which limits how firmly this can be stated. A further acceleration is possible, but it would have to be large. The thing to watch is the BLS release scheduled for October 15 at 8:30 a.m. ET. Specifically, watch whether goods prices post another outsized monthly gain.