US producer prices post largest gain in 4-1/2 years; expensive gasoline boosts retail sales
SPY•US producer prices rose 1.3% in September, their largest monthly gain since March 2022, while retail sales increased 0.8%, driven largely by higher gasoline prices. Core retail sales edged up 0.1%, and weekly jobless claims remained below 200,000 for a fifth straight week.
1. Producer prices surge
The Producer Price Index for final demand jumped 1.3% in September after an upwardly revised 0.5% gain in August. Prices rose 6.3% over the 12 months through September, the largest annual increase since December 2022. Energy prices climbed 10.8%, with gasoline up 20.3%; services prices rose 0.8%.
2. Retail sales rise on gas
Retail sales increased 0.8% in September after rising 1.3% in August. Receipts at service stations surged 6.4%, while sales excluding automobiles, gasoline, building materials and food services edged up 0.1%. Economists expected consumer spending growth to soften by year-end.
3. Fed and labor data
The inflation report showed increases in components used to calculate the Federal Reserve’s preferred inflation measures. Markets continued to expect the next rate increase in December, though they saw about a 30% chance of a hike at the Fed’s October 27-28 meeting. Initial jobless claims rose 1,000 to 199,000 last week, remaining below 200,000 for a fifth straight week.
