Wholesale Prices Unchanged in September 2024, Offset by Decline in Petroleum Costs
The latest economic report from the U.S. Department of Labor reveals that producer prices remained unchanged in September 2024, following a previous gain in the previous month.However, over the past 12 months, producer prices have seen an increase, driven by a decline in petroleum costs that offset an increase in food prices.
According to the report, the Wholesale Price Index (WPI) remained stable in September 2024 on a seasonally adjusted basis.The producer price index is a key measure to determine whether the cost of goods rises or falls at the wholesale level before they reach consumers.The year-on-year PPI recorded an advancement of 1.8%, with the core rate increasing at a higher rate than the total producer prices.
Finished consumer goods experienced a decline of -0.2% on a seasonally adjusted basis.Compared to September 2023, prices for finished consumer goods fell by -1.1%. However, the core PPI excluding food and energy witnessed a growth of 0.2% on a seasonally adjusted basis, with prices of synthetic rubber and household furniture showing above-average growth.On the other hand, prices for manufacturing materials deteriorated.
It is worth noting that some economists prefer the core PPI over the total PPI as they believe it provides a better understanding of longer-term inflationary trends.The year-on-year growth for core PPI excluding food and energy was recorded at 2.8%.Crude materials prices suffered a deterioration of -3.2% on a seasonally adjusted basis, primarily driven by a decline in prices for manufacturing materials, especially copper base scrap.However, the core rate experienced a rise of 1.9% on the seasonally adjusted basis.The core component of crude materials prices is considered a key leading indicator of inflation.Compared to September 2023, prices for crude materials dropped significantly by -9.5%.Moving on to intermediate goods, prices sunk by -0.8% on a seasonally adjusted basis, with processed fuels experiencing the most significant decline.The core intermediate rate, viewed as a leading indicator of inflation, also fell by -0.1% on a seasonally adjusted basis.From September 2023, intermediate prices have deteriorated by -2.7%. Intermediate products, such as steel processed from iron ore before being made into cars, fall under this category.
Investors are keeping a close eye on how corporations are passing along rising commodity prices to consumers, as it may be an indication of inflation on the rise.
In conclusion, the Producer Price Index for August 2024 shows that wholesale prices remained stable in September.The decline in petroleum costs offset the increase in food prices, resulting in unchanged overall producer prices.The core PPI excluding food and energy experienced growth, while prices for finished consumer goods, crude materials, and intermediate goods faced varying levels of decline.These trends indicate the importance of monitoring inflationary indicators and their potential impact on consumers.
