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U.S. Producer Prices Increased in August by More Than Forecast

·2 min read

(Bloomberg) -- Prices paid to U.S. producers increased in August by more than forecast as persistent supply chain disruptions squeeze production costs higher.

The producer price index for final demand increased 0.7% from the prior month and 8.3% from a year ago, a fresh series high, Labor Department data showed Friday. Excluding the volatile food and energy components, the so-called core PPI advanced 0.6%, and was up 6.7% from August of last year.

The median forecasts in a Bloomberg survey of economists called for a 0.6% month-over-month advance in both the overall PPI and the core figure.

A variety of challenges across the production pipeline -- from materials shortages and shipping bottlenecks to rising labor expenses -- have driven up costs for producers. Many companies have passed along those additional costs onto consumers through higher prices in recent months, further stoking consumer inflation.

The PPI report showed prices for goods increased 1% after a 0.6% gain in the prior month, while the cost of services rose 0.7%.

Meats, residential natural gas, industrial chemicals and motor vehicles were among the goods that moved higher. The rise in services reflected a 7.8% gain in margins for health, beauty and optical goods retailing.

The PPI data come ahead of next week’s consumer price index report, which is forecast to show a 0.4% advance in the CPI from the prior month and a 5.3% increase from August of 2020.

Producer prices excluding food, energy, and trade services -- a measure often preferred by economists because it strips out the most volatile components -- rose 0.3% from the prior month and increased 6.3% from a year earlier.

Producers around the world are raising prices amid soaring costs for commodities and shipping. A separate report out earlier this week showed prices paid to producers in China jumped in August from a year earlier by the most in 13 years.

More stories like this are available on bloomberg.com

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