August PPI Hits 5.4% as Energy Costs Drive the Gain
August PPI landed at 8:30 a.m. ET (3:30 p.m. in Istanbul): up 0.4% on the month and 5.4% on the year. Consensus for the annual print was 5.3%. It is the largest monthly gain in three months.
The increase sits almost entirely in one line item. The BLS attributed more than three-quarters of the rise to energy, with final demand energy prices up 4.2%. Diesel alone rose 24.1% and accounted for over a third of the increase in goods prices.
Services prices rose just 0.1% on the month. Core PPI excluding food and energy came in at 0.2% against a 0.3% consensus, and 4.6% on the year. Weekly jobless claims, released at the same hour, were 206,000 versus a 205,000 forecast.
This is not a print that describes demand-driven inflation. It describes a fuel bill.
The reaction is in the bond market. The 10-year Treasury yield pushed above 4.85%, near a three-year high. Brent is up 0.90% at $102.10 and WTI up 1.5% at $97.47; in futures the Dow is up 0.24% while the Nasdaq 100 is down 0.21%.
The European Central Bank raised rates this morning. The deposit rate went up 25 basis points to 2.5%, the second hike in three months. The ECB attributed roughly 90% of the recent rise in inflation to the energy shock rather than excess demand; eurozone August inflation climbed from 2.9% to 3.3%.
