The Bureau of Labor Statistics’ (BLS) Producer Price Index (PPI) showed that overall inflation in September was higher than experts had anticipated, despite the Federal Reserve’s (FRB) attempts to contain inflation.
The index grew 0.4% for the month, while the Dow Jones expected a 0.2% rise; prices for final demand goods and services rose 8.5% year on year, down from 8.7% in August but higher than forecasts of an 8.4% increase, according to the BLS. In September, final demand prices excluding food and energy, or “core” prices, increased 7.2% year on year.
“Prices for final demand products rose 0.4 percent in September after falling 1.1 percent in August,” according to the BLS data. “A 1.2% increase in the index for final demand foods is responsible for 60% of the increase.”
Annual inflation on final demand excluding food and energy, as measured by the PPI, has been declining month by month since peaking at 9.2% in the month of March. According to two important official metrics, inflation less energy and food, the cost of which may be discounted to establish a “core” inflation index that discounts the more volatile costs in food and energy, has stayed constant or increased in recent months.
According to the BLS, the Consumer Price Index (CPI), which gauges average costs paid by urban families, saw core prices climb 6.3% year on year in August, up from 5.9% in June and July. According to the Bureau of Economic Analysis, the Personal Consumption Expenditures Price Index (PCE), which includes rural families and a broader range of consumers, annual inflation of core prices has fluctuated near 5%, dipping briefly in July to 4.7% before recovering to 4.9% in August.
The Federal Reserve’s aggressive interest rate increase campaign is widely predicted to impair the job market, with Bank of America’s Chief U.S. Economist Michael Gapen anticipating both 5% unemployment and a recession once inflation is brought under control.