New economic figures released this week suggest that inflationary heat bubbling beneath the U.S. economy may finally be losing steam. According to fresh data from the Bureau of Labor Statistics (BLS), wholesale costs for core goods and services—those excluding the often-volatile food and energy categories—edged up only slightly in September, signaling a possible easing of price pressures deeper in the production pipeline.

The Producer Price Index (PPI), which measures how much suppliers charge businesses for goods and services, recorded a 0.3% month-to-month increase. This was precisely in line with industry forecasts. However, the real surprise was the core PPI figure, which rose a modest 0.1%—half of what economists expected. Only a month earlier, both core and headline PPI showed a slight decline of 0.1%, suggesting that September continued a trend of restrained pricing.

On an annual basis, headline wholesale inflation climbed 2.9%, while core PPI increased by 2.6%. Though still above the Federal Reserve’s preferred target range, the numbers hint at a softening environment compared to earlier inflation spikes. Much of the upward movement came from goods rather than services—a reversal from previous months when service-sector costs played a larger role.

Goods prices surged 0.9% in September, the fastest jump since early 2024. Energy costs were the primary driver: final-demand energy rose 3.5%, with gasoline registering a steep 11.8% increase. Food-related wholesale costs also rose 1.1%, adding to the pressure on retailers and consumers heading into the holiday season.

Services, however, remained largely unchanged. Transportation and warehousing rose 0.8%, and airline-related charges climbed 4%, but other service categories softened, effectively balancing the broader index.

The data’s release followed weeks of delay triggered by the federal government shutdown, which forced agencies like the BLS to pause scheduled reporting. October inflation figures for producers may not be released at all, and October’s consumer price report has already been cancelled. Economists expect that the November CPI, due December 18, will become a heavily scrutinized indicator for the Federal Reserve as it weighs its next interest rate decision.

In a separate update, the U.S. Census Bureau reported that retail sales rose 0.2% in September. While slightly below expectations, the data showed that consumer spending—responsible for roughly one-third of economic activity—remains resilient. Excluding autos, retail sales grew at a steady 0.3%.

Some categories struggled: online retailers saw a 0.7% slip, while sporting and hobby stores recorded a 2.5% drop. In contrast, miscellaneous retail outlets saw a notable 2.9% jump, and gas station sales rose 2% as higher fuel prices passed through to consumers. Restaurants and bars enjoyed a 0.7% boost in spending, underscoring Americans’ willingness to indulge in discretionary purchases despite tighter budgets.

Year-over-year, retail spending grew 4.3%, outpacing the month’s 3% inflation rate—an indication that economic activity remains grounded in strong consumer participation.

Overall, the new batch of data paints a picture of a mixed but stabilizing economy. While producers continue grappling with rising energy costs, weaker core pressure and steady consumer spending provide some encouragement that inflation may be gradually cooling as the year draws to a close.

FAQ SECTION

1. What is the Producer Price Index (PPI)?
The PPI measures the average change over time in the selling prices businesses receive for their goods and services.

2. Why is core PPI important?
Core PPI excludes food and energy, offering a clearer view of long-term inflation trends without short-term volatility.

3. Did wholesale inflation rise or fall in September?
Headline PPI increased by 0.3%, but core PPI rose only 0.1%, suggesting easing underlying pressures.

4. What drove the increase in wholesale prices?
Energy costs—especially gasoline—were the biggest contributors.

5. How did retail sales perform?
Retail sales rose 0.2% in September, with restaurants, gas stations, and miscellaneous retail sectors performing well.