U.S. Producer Prices Rise 0.4% in August, Annual PPI Reaches 5.4%

U.S. producer prices rose 0.4% in August, accelerating from a revised 0.1% increase in July, as a sharp rise in energy prices pushed up the cost of goods sold into final demand. Over the 12 months through August, the Producer Price Index for final demand increased 5.4%, up from 4.7% in July.

The Bureau of Labor Statistics said Thursday that prices for final-demand goods climbed 1.1% in August, while prices for final-demand services edged up 0.1%. The monthly increase followed a 0.1% gain in July, which BLS revised up from an initially reported flat reading, and a 0.1% decline in June.

A narrower measure that excludes food, energy and trade services rose 0.3% in August after increasing 0.4% in July. That measure was up 4.7% from a year earlier, unchanged from its July 12-month rate. The difference between the headline and narrower readings points to the outsized role that energy played in August’s monthly increase.

Energy prices drive a 1.1% jump in goods

More than three-quarters of the August increase in final-demand goods came from energy, according to BLS. The final-demand energy index rose 4.2% after two straight monthly declines in the broader goods category. Prices for goods excluding food and energy increased 0.4%, while food prices rose 0.1%.

Diesel fuel was the largest single contributor identified by the agency. Diesel prices jumped 24.1% in August, accounting for more than one-third of the increase in the final-demand goods index. Gasoline, jet fuel and home heating oil also became more expensive. BLS also reported increases for candy and nuts and tobacco products.

The increases were not universal. Residential electric power prices fell 0.5%, and BLS reported lower prices for fresh sausage and aluminum mill shapes. That mix matters because the headline goods index can move sharply when energy categories swing, even when other producer prices are changing much more gradually.

August therefore reversed some of the softness seen earlier in the summer. Final-demand goods prices had fallen 0.7% in July after a 1.4% decline in June, according to the prior BLS release. The latest 1.1% increase does not by itself establish a lasting trend, but it shows that the energy-driven relief in goods prices did not continue into August.

Services rise modestly despite higher transportation costs

Services were much less inflationary at the headline level. The final-demand services index increased just 0.1% in August, marking a third consecutive monthly rise. Transportation and warehousing services climbed 2.3%, but that was offset in part by a 0.2% decline in trade services. Prices for services excluding trade, transportation and warehousing were unchanged.

Truck transportation of freight rose 2.0% and was the largest contributor to the increase in final-demand services cited by BLS. Prices for airline passenger services, legal services and hospital inpatient care also increased, as did a measure of automobile retailing margins.

Other service categories moved lower. Margins for fuels and lubricants retailing fell 11.3%, while BLS also reported declines in margins for health, beauty and optical goods retailing and in machinery and equipment wholesaling. Portfolio management prices decreased as well.

The contrast between goods and services gives the August report a different composition from July. In July, services rose while goods prices fell. In August, goods supplied most of the upward pressure, especially through energy, while the broad services index barely moved. That distinction is useful because the PPI covers a wide range of prices received by domestic producers, not a single basket of factory inputs.

Core producer inflation stays at 4.7% before the CPI release

The 5.4% annual increase in final-demand prices was higher than July’s 4.7% pace, but the measure excluding food, energy and trade services remained at 4.7% year over year. On a monthly basis, that narrower index cooled slightly to a 0.3% increase from 0.4% in July. The result suggests that the acceleration in the headline annual rate was not matched by an acceleration in this particular underlying measure.

PPI measures average changes in prices received by producers for domestically produced goods, services and construction. It is therefore a seller-side measure and should not be read as if it were the Consumer Price Index. Producer costs can eventually feed into consumer prices, but the timing and size of any pass-through depend on margins, demand, contracts and the part of the supply chain involved.

The annual producer-price rate has also moved markedly higher from a year ago. In August 2025, final-demand PPI was up 2.7% from the prior year. The August 2026 rate of 5.4% is twice that pace, although month-to-month volatility, particularly in energy, remains a major part of the recent pattern.

For investors and policymakers, the report adds another inflation reading to a week already focused on price data. The BLS release calendar shows the August Consumer Price Index scheduled for Sept. 11 at 8:30 a.m. ET. That report will provide the next official measure of inflation from the consumer side and will help show whether August’s producer-price acceleration was accompanied by a similar change in prices paid by households.