Fresh government data released Thursday is putting renewed focus on inflation in the United States.
The Labor Department reported that producer prices — the prices businesses receive for goods and services — increased 0.4% in August. Over the 12 months through August, producer prices were up 5.4%, accelerating from the previous month’s increase.
Energy costs were an important factor behind the latest increase. Energy prices rose 4.2% in August, while the cost of goods sold by producers increased 1.1%. Some service costs also moved higher, including airline fares and hospital services.
The report matters because producer prices can provide an indication of cost pressures moving through the economy before they reach consumers.
It also comes at an important moment for the Federal Reserve. Investors are now watching closely to see whether persistent inflation pressures could influence the central bank’s decision on interest rates at its upcoming meeting.
At the same time, economists will be looking at the government’s consumer inflation report due Friday for another important picture of where prices are heading.
The latest numbers do not mean that consumer prices will suddenly surge, but they do show that inflationary pressure remains a concern — particularly as higher energy costs continue to affect businesses and consumers.
For American households, the key question is whether these pressures fade in the coming months or begin spreading more broadly across the economy.