On October 18, the U.S. Labor Department released its producer price indexes (PPI) for September, and the immediate news for this key measure of inflation was not good. Seasonally adjusted prices increased substantially at all three levels of processing-crude goods, intermediate goods and finished goods.
Prices for crude goods rose 10.2% in September, compared with 2.3% in August and 6.7% in July, the previous high for this year. Prices for intermediate goods rose 2.5% in September, by far their greatest increase of the year. The previous high was 1%, recorded in March and July. The index for finished goods rose 1.9% last month, more than three times August's six-tenths percent increase and nearly double July's 1% increase, the previous high for finished goods this year.
Rising energy prices account for much of the gains in September. Prices for finished energy goods increased 7.1% last month. Not counting energy and food, finished goods posted only a three-tenths percent price gain in September.
The PPI report came one day after Federal Reserve Board Chairman Alan Greenspan told a Tokyo audience, "Although the global economic expansion appears to have been on a reasonably firm path through the summer months, the recent surge in energy prices will undoubtedly be a drag from now on."