The Producer Price Index (PPI), which measures inflation on the wholesale level, was unchanged in September, with the annual reading falling from an upwardly revised 1.9% to 1.8%. Core PPI, which strips out volatile food and energy prices, rose 0.2% for the month and the year-over-year reading moved higher to 2.8%.
What’s the bottom line? While the hotter than expected CPI and PPI readings have caused some fear that inflation is reemerging, we need to look at the numbers in context. September’s 1.8% year-over-year PPI reading is well below the peak of 11.7% seen in 2022. Inflation has made significant progress lower and it’s important to remember that it will not move down in a straight line.