PPI +0.4% on a 24.1% Jump in Diesel (vs 0.4% Est) — But Core Rose Just 0.2% and the 43.7-Percent-Weight Services Block Was Exactly Flat

Fundamentals · 2026-09-10

Producer prices for final demand rose 0.4 percent in August, matching consensus, with the 12-month rate accelerating to 5.4 percent from 4.8; but core PPI excluding foods and energy rose only 0.2 percent against a 0.3 percent forecast, its third consecutive deceleration; final demand energy jumped 4.2 percent on a 24.1 percent leap in diesel fuel, contributing roughly half the entire headline on a 5.1 percent weight; final demand services less trade, transportation and warehousing — 43.7 percent of the index — was unchanged at 0.0 percent; July was revised up from unchanged to +0.1 percent; and upstream, stage 1 intermediate demand is running 11.3 percent over twelve months against final demand's 5.4.

What Is This?

• What it is: The Producer Price Index, released 8:30am ET, measuring price change from the seller's perspective — what domestic producers receive, across more than 44,000 monthly price quotations and over 10,000 individual indexes. It is organized into final demand, which is what gets sold to consumers, government, capital investment and export, and intermediate demand, which is what businesses buy as inputs.
• Why it matters: It arrives the day before the consumer inflation report and five days before an FOMC meeting at which three officials dissented in July in favor of a hike. Several PPI components — portfolio management, hospital care, airfares — feed directly into the Fed's preferred inflation gauge, so this is a partial read on that number before it exists.
• How to read it: Two things, in this order. First, the core measure, not the headline, because energy swings dominate the top line and reverse. Second, the stage structure, which is the reason to read PPI at all: stages 1 through 4 track prices at increasing distance from the consumer, so a gap between them says where pressure is building and whether it is moving forward. And note the scope: PPI excludes imports and excludes owners' equivalent rent, the single heaviest consumer-index component, so it is not a forecast of tomorrow's number.

Want the full explainer? Economic News Events, Explained breaks down this release and every other one we cover, in plain English.

Summary

Producer prices for final demand rose 0.4 percent in August, exactly matching the Dow Jones consensus, after +0.1 percent in July and -0.1 percent in June. On an unadjusted basis the 12-month rate rose to 5.4 percent from 4.8 percent in July — an acceleration of six-tenths in a single month, and about a tenth above what forecasters expected.

The core told the opposite story. Final demand excluding foods and energy rose just 0.2 percent against a 0.3 percent consensus, and the monthly path is now 0.7, 0.0, 0.4, 0.3, 0.2 across April to August — a third consecutive deceleration. Its 12-month rate is 4.6 percent. The broader core BLS leads with, final demand less foods, energy and trade services, rose 0.3 percent after 0.4 percent in July, with a 12-month rate of 4.7 percent, unchanged.

So the report splits cleanly. The headline accelerated by three-tenths and the core decelerated by a tenth, and the entire difference is energy.

Final demand energy rose 4.2 percent, and it did so on a 24.1 percent jump in diesel fuel — the single largest contributor, responsible for over a third of the rise in final demand goods by BLS's own accounting. Gasoline, jet fuel and home heating oil all advanced alongside it. Energy carries a relative importance of just 5.061 percent in the index, and at 4.2 percent it contributed roughly 0.21 percentage points — over half of the 0.4 percent headline, from a twentieth of the weight. Final demand energy is now up 24.4 percent over twelve months, with government purchased energy up 36.7 percent and energy for export up 40.7 percent.

The weight arithmetic is where this report becomes genuinely interesting. Final demand goods carry 29.0 percent of the index and produced about 0.32 of the 0.4 percentage points. Final demand services carry 68.3 percent and produced about 0.07. Construction, at 2.6 percent, produced nothing at all. Roughly four-fifths of the headline came from under a third of the index.

Inside services the concentration is sharper still. Final demand services less trade, transportation and warehousing — the single largest block in the entire index at 43.725 percent relative importance — was unchanged at 0.0 percent. That is the closest thing PPI has to an underlying-services measure, it is nearly half the index by weight, and in August it did not move. Its 12-month rate is 3.5 percent, the lowest of any major grouping in the report.

What did move was freight. Final demand transportation and warehousing rose 2.3 percent on a 4.857 percent weight, contributing about 0.11 percentage points — more than the entire services sector's net contribution, because final demand trade services fell 0.2 percent and subtracted about 0.04. Truck transportation of freight rose 2.0 percent. Transportation of passengers rose 4.1 percent. Over twelve months, final demand transportation and warehousing is up 13.0 percent, and passenger transportation is up 15.6 percent. Those are the hottest major lines in the report by a wide margin.

That connects directly to yesterday. The benchmark revision published on 28 August found transportation and warehousing employment understated by 135,100 jobs, a 2.0 percent upward revision and the largest absolute upward correction in the table. Today's release says prices in the same sector are running at 13.0 percent over twelve months. More people working in freight than the survey believed, and freight rates rising four times faster than underlying services. Whatever is happening in the goods-movement economy, two independent datasets now agree it is being under-measured.

The pipeline is the real signal, and it is the part that should worry anyone reading the core as an all-clear. Over twelve months: stage 1 intermediate demand is up 11.3 percent, stage 2 up 9.7 percent, stage 3 up 6.5 percent, stage 4 up 6.7 percent, final demand up 5.4 percent, and core final demand up 4.6 percent. Pressure is roughly twice as intense at the furthest point from the consumer as it is at the register, and it attenuates monotonically as it moves downstream through the stages closest to final sale. In August the monthly figures pointed the same way: stage 1 +1.4 percent, stage 2 +0.8, stage 3 +0.8, stage 4 +0.4.

Two readings of that are available and I do not think the evidence settles between them. Either producers are absorbing upstream costs in margin — which is what the trade services decline and the flat core services block would look like — and that absorption has a limit. Or the upstream heat is energy and metals that will reverse before it reaches anyone, exactly as the June collapse did, when stage 2 fell 1.8 percent and processed energy goods dropped 7.1 percent in a single month. The honest answer is that this has now happened twice this year in both directions and the pass-through has not shown up either time.

Intermediate demand corroborates the upstream story. Processed goods rose 1.8 percent, with processed energy up 7.3 percent and over 80 percent of the advance attributable to it — nearly two-thirds from diesel alone. Its 12-month rate is 11.5 percent. Unprocessed goods rose 1.1 percent on a 2.1 percent rise in nonfood materials less energy, with a 12-month rate of 12.8 percent, the highest in the report. Nonferrous scrap rose 3.7 percent.

Three product-level details are worth pulling out because they connect to what this feed has been tracking.

Printed circuit assemblies, boards, modules and modems rose, and they appear as a named contributor in processed goods for intermediate demand, in stage 3, and in stage 4. That is electronics cost pressure showing up simultaneously at three points in the production chain. ISM has had electronic components on its short-supply list for 18 consecutive months and added GPUs in August. The AI build-out that has been visible in import data and capital-goods orders is now visible in producer prices.

Temporary help services fell, and management, scientific and technical consulting services dropped 4.6 percent — the largest named decline in intermediate services. Both sit inside professional and business services, the sector ADP put at -16,000 in August and JOLTS showed down on all four of its measures in July. Falling prices for consulting and temp help alongside falling employment in the same sector is a demand story, not a supply one, and it is now confirmed from a third independent direction.

Portfolio management moved lower, having risen 6.5 percent in July when it led the entire services increase. It is a direct input to the Fed's preferred inflation measure, so its reversal is mildly disinflationary for that number. Hospital inpatient care and airline passenger services, also inputs, both rose.

The revisions deserve a note because they were not trivial. July's headline was revised from unchanged to +0.1 percent, and its 12-month rate from 4.7 to 4.8 percent. The "PPI was flat in July" line that circulated last month no longer describes the data. July's energy index was revised from -3.1 percent to -1.8 percent — the July energy decline was little more than half as deep as first reported — and July final demand goods from -0.7 to -0.4 percent. June's core was revised up a tenth to 0.2 percent. Every one of those revisions went the same direction: hotter.

For the Fed the report is genuinely two-handed, which is the least useful thing it could have been five days before a meeting. The core undershot, decelerated for a third month, and the largest services block was flat — that is the disinflation case, and it is a real one. Against it, the 12-month headline accelerated six-tenths to 5.4 percent, every revision went up, and the upstream stages are running at nine to eleven percent. Neither camp on the committee leaves this without something to point at.

One thing it does confirm, again. Unit labor costs are rising 1.4 percent over four quarters and average hourly earnings 3.1 percent over twelve months. Producer prices are rising 5.4 percent, energy 24.4 percent and freight 13.0 percent. Whatever is generating inflation in this economy, this report is the fourth in a fortnight to say it is not the price of labor.

The Internals

The headline against expectations:

Measure · August 2026 · July 2026 · Consensus · 12-month

Final demand, monthly · Up 0.4 percent · Up 0.1 percent, revised from unchanged · Up 0.4 percent · Up 5.4 percent

Final demand less foods and energy, monthly · Up 0.2 percent · Up 0.3 percent · Up 0.3 percent · Up 4.6 percent

Final demand less foods, energy and trade services · Up 0.3 percent · Up 0.4 percent · Not forecast · Up 4.7 percent

Final demand goods · Up 1.1 percent · Down 0.4 percent · Not forecast · Up 7.7 percent

Final demand services · Up 0.1 percent · Up 0.2 percent · Not forecast · Up 4.5 percent

Final demand construction · Unchanged · Up 2.2 percent · Not forecast · Up 5.3 percent

The core monthly path, showing the deceleration:

Month · Final demand less foods and energy · Final demand total

April 2026 · Up 0.7 percent · Up 1.1 percent

May 2026 · Unchanged · Up 0.5 percent

June 2026 · Up 0.4 percent · Down 0.1 percent

July 2026 · Up 0.3 percent · Up 0.1 percent

August 2026 · Up 0.2 percent · Up 0.4 percent

Weights and contributions to the 0.4 percent headline. Relative importance is as of December 2025:

Component · Relative importance · Monthly change · Approximate contribution

Final demand goods · 29.028 percent · Up 1.1 percent · About 0.32 points

Final demand services · 68.338 percent · Up 0.1 percent · About 0.07 points

Final demand construction · 2.634 percent · Unchanged · About zero

Of which: final demand energy · 5.061 percent · Up 4.2 percent · About 0.21 points

Of which: transportation and warehousing · 4.857 percent · Up 2.3 percent · About 0.11 points

Of which: trade services · 19.755 percent · Down 0.2 percent · About minus 0.04 points

Of which: services less trade, transportation, warehousing · 43.725 percent · Unchanged · About zero

Final demand detail with annual rates:

Grouping · Monthly change · 12-month change

Final demand energy · Up 4.2 percent · Up 24.4 percent

Government purchased energy · Up 9.0 percent · Up 36.7 percent

Energy for export · Up 8.0 percent · Up 40.7 percent

Final demand transportation and warehousing · Up 2.3 percent · Up 13.0 percent

Transportation of passengers · Up 4.1 percent · Up 15.6 percent

Transportation and warehousing of goods · Up 1.7 percent · Up 12.0 percent

Final demand goods less foods and energy · Up 0.4 percent · Up 5.1 percent

Final demand trade services · Down 0.2 percent · Up 4.5 percent

Final demand services less trade, transportation, warehousing · Unchanged · Up 3.5 percent

Final demand foods · Up 0.1 percent · Up 0.1 percent

Private capital equipment · Up 0.3 percent · Up 4.0 percent

Finished consumer foods · Unchanged · Down 0.5 percent

Named product movers, from the release text:

Item · Change · Where it appears

Diesel fuel · Up 24.1 percent · Over a third of the final demand goods rise; two-thirds of processed goods

Transportation of passengers · Up 4.1 percent · Final demand services

Nonferrous scrap · Up 3.7 percent · Unprocessed goods for intermediate demand

Truck transportation of freight · Up 2.0 percent · Led the final demand services increase

Courier, messenger and postal services · Up 1.5 percent · Services for intermediate demand

Residential electric power · Down 0.5 percent · Final demand goods, an offset

Fluid milk products · Down 3.1 percent · Processed goods for intermediate demand

Management, scientific and technical consulting · Down 4.6 percent · Largest named decline in intermediate services

Slaughter cattle · Down 6.4 percent · Unprocessed goods for intermediate demand

Fuels and lubricants retailing margins · Down 11.3 percent · Largest named decline in final demand services

The Pipeline

This is the section that distinguishes PPI from every other inflation release. Stages 1 through 4 measure input prices at increasing distance from final sale, with stage 4 industries producing mainly for consumers and stage 1 industries producing mainly for stage 2. Read together they show where pressure sits and whether it is traveling forward.

Stage · Monthly change · Goods inputs · Services inputs · 12-month change

Stage 1, furthest from the consumer · Up 1.4 percent · Up 2.1 percent · Up 0.5 percent · Up 11.3 percent

Stage 2 · Up 0.8 percent · Up 1.8 percent · Up 0.1 percent · Up 9.7 percent

Stage 3 · Up 0.8 percent · Up 1.0 percent · Up 0.5 percent · Up 6.5 percent

Stage 4, closest to the consumer · Up 0.4 percent · Up 0.7 percent · Up 0.2 percent · Up 6.7 percent

Final demand · Up 0.4 percent · Up 1.1 percent · Up 0.1 percent · Up 5.4 percent

Final demand less foods and energy · Up 0.2 percent · Not applicable · Not applicable · Up 4.6 percent

Intermediate demand by commodity type:

Grouping · Monthly change · 12-month change

Unprocessed goods for intermediate demand · Up 1.1 percent · Up 12.8 percent

Processed goods for intermediate demand · Up 1.8 percent · Up 11.5 percent

Services for intermediate demand · Up 0.3 percent · Up 5.1 percent

Processed energy goods · Up 7.3 percent · Not published in release text

Processed materials less foods and energy · Up 0.5 percent · Not published in release text

Unprocessed nonfood materials less energy · Up 2.1 percent · Not published in release text

Intermediate transportation and warehousing services · Up 1.3 percent · Not published in release text

Intermediate services less trade, transportation, warehousing · Down 0.1 percent · Not published in release text

The gap between stage 1 at 11.3 percent and final demand core at 4.6 percent is 6.7 percentage points. That is either a pass-through risk that has not arrived yet or an absorption that producers are eating in margin. The evidence for absorption is on the page: trade services margins fell 0.2 percent at final demand, and fuels and lubricants retailing margins collapsed 11.3 percent in a month when the fuel those retailers sell rose 24.1 percent. Retailers did not pass the diesel move through. Whether they can keep not passing it through is the question this report leaves open.

The counter-evidence is June, four months ago, when this same upstream heat reversed hard: stage 2 fell 1.8 percent, processed energy goods fell 7.1 percent, and unprocessed goods fell 6.5 percent. The pipeline has filled and drained twice in 2026 without visibly reaching the consumer either time.

Revisions

Data for April through July were revised. Comparing today's release with the one published on 13 August:

Series · As published 13 August · Revised, 10 September · Direction

July final demand, monthly · Unchanged · Up 0.1 percent · Hotter

July final demand, 12-month · Up 4.7 percent · Up 4.8 percent · Hotter

July final demand energy · Down 3.1 percent · Down 1.8 percent · Hotter

July final demand goods · Down 0.7 percent · Down 0.4 percent · Hotter

July final demand goods less foods and energy · Up 0.1 percent · Up 0.2 percent · Hotter

July transportation and warehousing · Down 1.8 percent · Down 1.1 percent · Hotter

June final demand less foods, energy, trade · Up 0.1 percent · Up 0.2 percent · Hotter

June final demand, 12-month · Up 5.5 percent · Up 5.6 percent · Hotter

June final demand energy · Down 6.5 percent · Down 6.8 percent · Cooler

Almost every revision went the same way. The headline that "producer prices were unchanged in July" is no longer accurate, and the energy decline that made July look benign was overstated by more than a percentage point.

Impact on USD

• Mixed, lean bullish — the headline matched and the annual rate accelerated six-tenths to 5.4 percent, roughly a tenth above expectations, with every meaningful revision going hotter.
• Against it: core at 0.2 percent undershot the 0.3 percent forecast and decelerated for a third straight month, which is the cleanest disinflation signal in the report.
• The largest single block in the index, services less trade, transportation and warehousing at 43.7 percent weight, was exactly flat with a 12-month rate of 3.5 percent.
• Upstream is the hawkish argument: stage 1 at 11.3 percent and stage 2 at 9.7 percent over twelve months against final demand's 5.4.
• Conditional on tomorrow. This release resolves nothing on its own five days before the FOMC, and consumer prices carry the decision.

Impact on US Indices (ES / NQ / YM)

• Mixed, lean bullish — a core miss is what equity wanted, and the flat services block supports it.
• Margin pressure is the risk in the detail: trade services fell 0.2 percent and fuels and lubricants retailing margins collapsed 11.3 percent in a month when diesel rose 24.1 percent. Distributors absorbed the move rather than passing it on.
• Transport and freight names are the clearest relative winner — final demand transportation and warehousing up 13.0 percent over twelve months, truck freight up 2.0 percent on the month.
• Technology takes a cost signal rather than a demand one: printed circuit assemblies, boards, modules and modems rose and appear at three separate stages of the production chain.
• Professional services and staffing take the clearest hit, with consulting down 4.6 percent and temporary help falling — the third independent confirmation of that sector contracting.

Impact on Gold

• Mixed, lean bullish — a 12-month headline accelerating to 5.4 percent with upstream stages at nine to eleven percent is an inflation-persistence argument.
• Against it: the core undershot and decelerated, which if confirmed tomorrow argues for lower real rates being unnecessary.
• The durable support is distributional rather than monetary. Producer prices up 5.4 percent against average hourly earnings up 3.1 percent means the squeeze this feed has documented all fortnight continues.

What To Watch

• Consumer prices — Friday, 11 September, 8:30am ET. The last data before the FOMC. This report gives a partial read through portfolio management, which fell, and hospital inpatient care and airfares, which rose — but PPI excludes imports and excludes owners' equivalent rent, so the mapping is loose.
• FOMC decision and dot plot — Tuesday and Wednesday, 15-16 September. Three dissents for a hike in July, employment settled by last Friday's payroll report, and now an inflation print that gives both camps ammunition.
• Whether the upstream stages pass through or drain. Stage 1 at 11.3 percent over twelve months has now built twice in 2026 and reversed once without reaching the consumer. The third time is the test.
• Diesel specifically. A 24.1 percent monthly move is not a trend, and it feeds truck freight, courier services and every goods price behind them with a lag. If it holds through September the core will not stay at 0.2 percent.
• Trade services margins. Down 0.2 percent at final demand and down 11.3 percent in fuels retailing. Absorption is a choice with a limit, and margin compression shows up in earnings before it shows up in prices.
• Next PPI — Thursday, 15 October, 8:30am ET.

TLDR

Producer Price Indexes, August 2026 (released 10 September, USDL 26-1495):

• Final demand: up 0.4 percent against a 0.4 percent consensus — in line; 12-month rate 5.4 percent, up from 4.8 and about a tenth above expectations
• Core, excluding foods and energy: up just 0.2 percent against a 0.3 percent forecast — a miss, and a third consecutive deceleration from 0.4 to 0.3 to 0.2; 12-month 4.6 percent
• Final demand less foods, energy and trade services up 0.3 percent, 12-month 4.7 percent, unchanged
• Energy rose 4.2 percent on a 24.1 percent jump in diesel fuel — about 0.21 of the 0.4 point headline, from a 5.1 percent weight. Energy is up 24.4 percent over twelve months
• Goods carry 29.0 percent of the weight and produced four-fifths of the headline; services carry 68.3 percent and produced about 0.07 points
• Services less trade, transportation and warehousing — 43.7 percent of the index, its single largest block — was exactly unchanged, with a 12-month rate of 3.5 percent, the lowest in the report
• Freight is the hot spot: transportation and warehousing up 2.3 percent on the month and 13.0 percent over twelve; passenger transport up 4.1 percent and 15.6 percent
• Upstream is running at roughly double final demand: stage 1 up 11.3 percent over twelve months, stage 2 up 9.7, against final demand's 5.4 and core's 4.6
• Intermediate demand: processed goods up 11.5 percent annually, unprocessed goods up 12.8 percent
• Printed circuit assemblies, boards, modules and modems rose at three separate stages — the AI build-out reaching producer prices
• Consulting fell 4.6 percent and temporary help declined — a third independent confirmation that professional and business services is contracting
• July was revised from unchanged to +0.1 percent and its annual rate from 4.7 to 4.8; July energy from -3.1 to -1.8. Nearly every revision went hotter

The headline and the core say opposite things and the whole difference is diesel. A 24.1 percent monthly move in one fuel, on a five percent weight, delivered half the top line, while the 43.7 percent of the index that measures underlying services did not move at all and is running at 3.5 percent over twelve months. That is the disinflation case and it is real. The case against it sits upstream, where stage 1 inputs are rising 11.3 percent over twelve months against final demand's 5.4 — a gap of nearly seven points that either passes through eventually or gets absorbed in margin, and the margin evidence is already on the page, with fuels retailing margins collapsing 11.3 percent in the month their product rose 24.1 percent. This same upstream heat built and drained once already in June without reaching anyone. Five days before an FOMC with three standing dissents for a hike, both camps got something quotable, every revision went hotter, and the decision now rests entirely on tomorrow's consumer print.

_For informational purposes only. Not investment advice._