Producer prices were surprisingly firm in September. A 0.3 percent monthly rise was the largest since April and the third increase in as many months. It was also enough to lift the annual PPI inflation rate by 0.5 percentage points to 3.1 percent, a 5-month high.
The monthly headline advance was broad-based with basics up 0.3 percent, capital goods 0.1 percent and consumer goods also 0.1 percent. However, energy (1.0 percent) dominated the increase and excluding this category, the PPI was just 0.1 percent above its August level and 2.6 percent stronger on the year, unchanged from its yearly rate last time.
The underlying trend in producer prices has been essentially flat throughout 2017 to date. Signs of building pressure on capacity have yet to provide any real boost and in the absence of this, core CPI inflation is likely to climb only quite slowly.