Prices paid by U.S. businesses for goods and services increased more than expected in September amid other signs that inflationary pressures may be increasing.
The Labor Department said its producer price index was up 0.3% on a seasonally adjusted basis compared with August. Economists surveyed by The Wall Street Journal had expected a 0.2% increase.
The price index for goods advanced 0.7% in September, following a 0.4% decline in August. The government attributed 30% of that increase to a 5.3% increase in gasoline prices.
The indexes for diesel fuel, jet fuel, and residential natural gas also moved higher. Energy prices as a whole were up 2.5%, after a 0.8% decline in August, and food prices rose 0.5%, after a 1.6% the previous month.
Excluding the volatile food and energy categories, prices rose 0.2% last month and, excluding food, energy and trade services, so-called core prices were up 1.5% for the 12 months ended in September — the largest annual gain since November 2014 though still short of the Federal Reserve’s 2% inflation target.
As The Wall Street Journal reports, weak inflation is one factor that has held back the Fed from raising its benchmark interest rate since December.
“With labor market slack being taken up at a somewhat slower pace than in previous years … and inflation continuing to run below our 2% target, we chose to wait for further evidence of continued progress” before raising rates, Chairwoman Janet Yellen said after the September policy meeting.
In other data from the Labor Department, prices for services inched up 0.1%, fueled by a 3.9% gain in prices for securities brokerage, dealing, investment advice, and related services.
Some senior Fed officials “argue that inflation is speeding up, but others think price pressures are likely to remain muted for some time to come,” MarketWatch said.