US September PPI Down as Expected, Core PPI at 17-Year Highs

The US Producer Price Index fell by 0.4% as expected in the month of September, the Department of Labor reported yesterday.

This is the second straight MoM decrease after it fell 0.9% in August. The annual rate now stands at 8.7%, down from the 9.6% seen in August.

Leading the index lower once again was energy. Prices in September declined by 2.9% after the drop of 4.6% in August. Crude goods were down 7.9% while intermediate goods fell 1.2%.

On closer inspection, the energy sector was hit by home heating oil and liquefied petroleum gas, down 13.9% and 11.1% respectively. Natural gas prices fell by a record 8.2%.

Core PPI, on the other hand, beat analysts expectations and posted a 0.4% MoM gain. This represents double what the market had been expecting. Over the past 12 months the Core index now stands up 4.0%, the fastest rate since February 1991.