Los Angeles, California – Wholesale inflation exceeded expectations last month, with the producer price index for final demand increasing by 0.2%, surpassing the anticipated 0.1% growth. The report released by the Bureau of Labor Statistics showed a decrease in headline PPI from 2.1% in July to 1.7% in August on an annual basis, falling below the projected 1.8% growth.

Additionally, core PPI, excluding food and energy for final demand, rose by 0.3% last month, outpacing the expected 0.2% increase. On a yearly basis, core PPI accelerated from 2.3% in July to 2.4% in August, falling slightly below the expected 2.5% growth.

The BLS shifted its focus to its new “final demand” series in 2014, constructing data only back to November 2009 for headline and April 2010 for core. Long-term trends continue to be tracked through the legacy PPI for finished goods, which remain significantly correlated with the final demand indexes.

In August, the PPI for finished goods saw a month-over-month increase of 0.2%, following a 0.5% decline in the previous month. The annual headline PPI for finished goods currently stands at 0.3%, down from the 1.9% reported in the previous month when seasonally adjusted.

Similarly, core PPI for finished goods experienced a 0.3% increase month-over-month, compared to a 0.1% increase in the prior month. Yearly core PPI for finished goods now sits at 2.3%, up from 2.1% in the previous month when seasonally adjusted.

The comparison between Producer Price Index (PPI) and Consumer Price Index (CPI) illustrates monthly price changes, offering perspectives from the producer and consumer standpoints. PPI is considered a leading indicator of consumer inflation, as producers generally pass on increased costs to consumers.

Following concerns of high inflation, the Federal Reserve has been tightening policies to combat price surges. However, recent years have seen a decrease in inflation levels, though the threat of a resurgence remains. Questions linger regarding the Fed’s timing for rate cuts, potential delays, and the looming possibility of a recession.