Wholesale prices rose 0.4% in August, as expected

U.S. wholesale prices rose in August, according to a report Thursday that could play a key role in the Federal Reserve's upcoming interest rate decision.

The producer price index , a measure of final demand costs for goods and services, increased a seasonally adjusted 0.4% for the month, in line with the Dow Jones consensus, the Bureau of Labor Statistics reported.

On an annual basis, that put the PPI at 5.4%, still well above the Fed's 2% inflation target and 0.1 percentage point higher than expected. The PPI rose 0.1% in July, a slight upward revision from the original estimate of no change.

Excluding food and energy, the core PPI accelerated by 0.2%, against the forecast for a 0.3% increase. Core less trade services, another volatile category, was up 0.3%, in line with estimates.

Stock market futures were negative following the report, the release of which coincided with U.S. crude oil prices topping $100 a barrel. Treasury yields moved sharply higher, with the 10-year note hitting its highest since November 2023.

"Net, net, today's PPI inflation report does nothing to turn down the warnings about the inflation threats the economy faces, especially if you are an inflation hawk with an itchy trigger finger at the Federal Reserve," wrote Chris Rupkey, chief economist at Fwdbonds.

Energy prices in particular and goods prices overall were responsible for most of the PPI increase. Final demand energy prices rose 4.2%, pushed largely by soaring diesel, which surged 24.1%. Goods prices broadly increased 1.1%.

Services prices were up just 0.1%, with a 2.3% increase in transportation and warehousing accounting for much of that move.