Where producer prices go, consumer prices are likely follow

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Kai Ryssdal (1:05)

We've got two and a half stories on inflation today. We've got one of our small business regulars, and we've got our series, The Age of Work. From American public media, this is Marketplace.

In Los Angeles, I'm Kai Ryssdal. Thursday is the day. October the 15th is the date. Good. It always is. To have you along, everybody.

You know, there is some degree of peril in predicting the future, in guessing what is going to happen down the line. There is an entirely different degree of, I don't know, hubris, misplaced confidence, temptation of the gods, in saying outright what is going to happen down that same line. But the economic calendar has lined up this week in such a way as to make it possible to do very nearly that. This morning brought us the second act of our monthly inflation double feature. It's the producer price index. Price is, very broadly speaking, at the wholesale level. Business inflation, one might say, as opposed to consumer inflation, which we got yesterday. August to September, the PPI rose 1.3 percent, the biggest monthly jump since the heyday of pandemic inflation back in 2022 Year to year, a whopping, and that is not too strong a word, 6.3 percent. So, about those predictions, Marketplace's Elizabeth Trowall has more now on the economy yet to come.

Elizabeth Trowall (2:48)

As opposed to the consumer price index, the producer price index measures.

Scott Sager (2:53)

Price changes that producers and service providers receive for the sale of their products.

Elizabeth Trowall (2:59)

That's Scott Sager with the Bureau of Labor Statistics. So, think the price an accounting firm charges a business for their services, or the price a farmer sells their crop for.

Scott Sager (3:10)

Whether it's a manufacturer who's manufacturing into a type of manufactured food, or if it's being sold for ultimately for the public.

Elizabeth Trowall (3:19)

In this month's data, Energy was a major contributor to rising producer prices, though not the only contributor. Aditya Bhave is with Bank of America Securities.

Aditya Bhave (3:29)

It's a broad-based surprise in inflation that should be quite unpleasant from the Fed's perspective.

Elizabeth Trowall (3:35)

He says the September producer data raises the risk that more consumer inflation is coming.

Aditya Bhave (3:41)

Because for producers, this is an input cost. It may not be a massive share of their costs, but it's there and it's moving up. Now the question is, how comfortable do they feel passing those costs on to consumers?

Elizabeth Trowall (3:57)

This is yet another round of shocks caused by the global supply crunch on oil and fuel, says Dana Peterson with the Conference Board.

Dana Peterson (4:05)

The first round is immediate, so you can see gasoline prices spiking intraday. But then as producers endure those prices and pass it along or share it, share the burden with the wholesalers, the retailers, and ultimately the consumer, that takes longer.

Elizabeth Trowall (4:26)

So the higher prices producers are feeling now are expected to ripple out to consumers in the months to come. I'm Elizabeth Troval for Marketplace.

Kai Ryssdal (4:37)

Wall Street on this Thursday. Blue chips did pretty well. Everything else, you know, fine. We will have the details when we do the numbers.

The The The The The The The The Beautiful though the inflation data has been these past couple of days, there are, and I know it might not feel like it, but there are slices of this economy where those rising prices aren't rising quite as sharply as the top line numbers for both the CPI and the PPI might indicate. Marketplace's Caitlin Tan has that one.

Caitlin Tan (5:31)

Start with food prices. It's kind of a shock, but at least some foods are not experiencing a whole lot of inflation. David Anderson with Texas A&M says that has a lot to do with how much diesel it takes to get that food to your supermarket.