Producer Price Index Rises 50% More Than Expected In September

The Producer Price Index (PPI), essentially inflation at the wholesale level, rose more than expected in September as prices for necessities and staple goods continue to rise.

The PPI is considered to be a “good leading indicator of inflationary pressures” because it shows how costs work their way down from companies to consumers. PPI actually tracks what producers in America get paid for their goods and services, and as those prices rise, that means that costs are rising as well.

Economists had been expecting, according to CNN Business, the 12-month rise in September to be 8.4% and the month-to-month rise to come in at 0.2%. The actual numbers were 8.5% and 0.4% respectively.

While one-tenth of a percentage point does not seem like a lot, it is a definite indicator of higher inflation, and it comes at a time when the Fed continues to raise interest rates in an effort to lessen it.

Yung-Yu Ma, chief investment strategist at BMO Wealth Management said, “The trajectory of downward-trending inflation data is starting to feel like wishful thinking, as the data has been coming in choppy at best.”

Some economists are beginning to wonder if the steps being taken by the Fed are having anything more than a negative effect on the economy. Jeffrey Roach, the chief economist at LPL Financial said, “This report does not yet have convincing evidence that inflation is cooling across the broad swath of the economy. Expect to see the Fed recommit to fighting inflation at the risk of pushing the economy into recession.”

In an economic climate that some people are calling “Bidenflation,” numbers like these point to an upcoming recession with high inflation. The Consumer Price Index (CPI) which is synonymous with the inflation rate, is scheduled to be released Thursday morning and the combination of those two numbers, CPI and PPI, should be a good indicator for the state of the economy leading into the midterm elections.