Haver Analytics
Haver Analytics
| Sep 14 2023

U.S. PPI Jumped in August, Driven by Gasoline Prices

  • Larger-than-expected 0.7% m/m increase in August.
  • About 50% of overall increase attributable to 20% m/m surge in gasoline prices.
  • PPI excluding food and energy prices rose just 0.2% m/m.

The Producer Price Index for final demand rose a larger-than-expected 0.7% m/m (1.6% y/y) in August following an upwardly revised 0.4% monthly gain in July (previously 0.3% m/m). A 0.4% m/m increase had been expected by the Action Economics Forecast Survey. This was the largest monthly increase in the overall PPI since June 2022. The PPI excluding food and energy prices edged up 0.2% m/m (2.2% y/y) after a 0.4% m/m increase in July. The PPI excluding food, energy and trade services prices rose 0.3% (3.0% y/y), matching an upwardly revised 0.3% m/m increase in July (previously 0.2% m/m).

A sharp rise in energy prices, primarily gasoline, was the primary factor behind the August jump in the overall PPI. Gasoline prices surged 20.0% m/m (+1.7% y/y), leading to a 10.5% m/m jump (-2.8% y/y) in energy prices. The rise in gasoline prices accounted for nearly 50% of the increase in the overall index. Diesel fuel prices rocketed 41.1% m/m in August, their first monthly increase in seven months. Home heating fuel prices were up 18.1%. By contrast, the price of residential natural gas fell 1.1% while the price of residential electric power slipped 0.5% m/m.

Food prices fell 0.5% m/m (-0.7% y/y) in August, their fourth monthly decline in the past five months. This was led by a 11.5% m/m decline in prices of fresh and dry vegetables and a 4.5% m/m drop in beef prices (their first decline in four months). By contrast, egg prices jumped 9.8% m/m, fresh fruit prices rebounded 4.7% m/m, and prices of diary products increased 1.9% m/m, their first monthly gain since October 2022.

Prices of final demand goods increased 2.0% m/m (0.5% y/y) in August, their largest monthly gain since June 2022. Goods prices less food and energy edged up 0.1% m/m (1.8% y/y). Cre consumer goods prices increased 0.3% m/m in August while prices of private capital equipment edged up 0.1% m/m. The prices of government purchased goods excluding food and energy prices also edged up 0.1% m/m in August.

Services prices rose 0.2% m/m (2.2% y/y) in August following a 0.5% monthly gain in July. Trade services prices fell 0.3% m/m after a 0.5% m/m increase in July. The final demand price of transportation and warehousing services jumped 1.4% m/m in July, the largest monthly gain since May 2022 and likely driven by the sharp jump in motor fuel prices.

Construction costs rose 0.2% m/m (3.9% y/y) in August following a 1.2% monthly decline in the previous month. Intermediate goods prices rebounded 2.1% m/m (-4.3% y/y) in August, reflecting a 12.1% m/m surge in processed energy prices, the first increase in seven months.

The PPI data are published by the Bureau of Labor Statistics and can be found in Haver’s USECON database. Further detail is contained in PPI and PPIR. The expectations figures are available in the AS1REPNA database.

  • Sandy Batten has more than 30 years of experience analyzing industrial economies and financial markets and a wide range of experience across the financial services sector, government, and academia.   Before joining Haver Analytics, Sandy was a Vice President and Senior Economist at Citibank; Senior Credit Market Analyst at CDC Investment Management, Managing Director at Bear Stearns, and Executive Director at JPMorgan.   In 2008, Sandy was named the most accurate US forecaster by the National Association for Business Economics. He is a member of the New York Forecasters Club, NABE, and the American Economic Association.   Prior to his time in the financial services sector, Sandy was a Research Officer at the Federal Reserve Bank of St. Louis, Senior Staff Economist on the President’s Council of Economic Advisors, Deputy Assistant Secretary for Economic Policy at the US Treasury, and Economist at the International Monetary Fund. Sandy has taught economics at St. Louis University, Denison University, and Muskingun College. He has published numerous peer-reviewed articles in a wide range of academic publications. He has a B.A. in economics from the University of Richmond and a M.A. and Ph.D. in economics from The Ohio State University.  

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