The Producer Price Index for final demand increased 0.5 percent in September, seasonally
adjusted, the U.S. Bureau of Labor Statistics reported today. Final demand prices rose 0.7
percent in August and 0.6 percent in July. (See table A.) On an unadjusted basis, the index for
final demand advanced 2.2 percent for the 12 months ended in September, the largest increase
since moving up 2.3 percent for the 12 months ended in April.

Leading the increase in the final demand index in September, prices for final demand goods rose
0.9 percent. The index for final demand services advanced 0.3 percent.

Prices for final demand less foods, energy, and trade services increased 0.2 percent in September,
the fourth consecutive advance. For the 12 months ended in September, the index for final
demand less foods, energy, and trade services moved up 2.8 percent.

[That’s an ugly jump, although the overall year-on-year rate isn’t too bad at 2.2%. That’s in part because we’re comparing to already-inflated levels last year and the year before that. The 0.5% month-on-month overall and 0.9% on goods is even more alarming. The Fed will likely see that as a harbinger of future spikes in CPI and PCE inflation indexes. — Ed]