Producer input costs ran 6.1 points ahead of final demand prices in August
Processed intermediate goods rose 11.5 percent over 12 months while the prices firms finally charge rose 5.4 percent. Diesel accounts for most of August's monthly move, and the measure that excludes distributor margins accounts for the rest.
The Investor · Invest desk
What happened
- Final demand goods advanced 1.1 percent, with energy up 4.2 percent accounting for over three-fourths of that and diesel fuel, up 24.1 percent, for over a third.
- Processed goods for intermediate demand rose 1.8 percent after falling 0.4 percent in July, with processed energy goods up 7.3 percent supplying over 80 percent of the advance.
- Wolf Richter, writing at Wolf Street, called on the FOMC's 12 voting members to stop waiting and vote for rate hikes.
Why it matters
- What it limits constraint Whoever cannot reprice absorbs the difference between input and output inflation. Fuels and lubricants retailers did so inside a single month, with margins down 11.3 percent in August.
- Who has to decide decision Sellers now choose between repricing on the August input bill and waiting for the fuel leg to reverse. The ex-margin core was already climbing before diesel moved.
- What doesn't add up contradiction Whether this is a hike case depends on the window chosen: the 12-month unadjusted rate and the last three seasonally adjusted months point opposite ways, and July was revised higher after the fact.
Next story · Invest · yesterday
Crypto liquidations hit $948 million as Bitcoin dips under $80,000 after hot PPI data, 90.6% of them longsConfirmed13 publishers
Processed goods for intermediate demand rose 11.5 percent over the 12 months to August, against 5.4 percent for final demand [14][3]. That is a gap of 6.1 points between what firms pay each other for goods and what they get at the end of the chain [28]. Input inflation is running about 2.1 times output inflation [29]. The single month says the same thing. The BLS index for final demand less foods, energy and trade services rose 0.3 percent [5]. Wolf Richter's core measure, which excludes food and energy but keeps trade, rose 0.16 percent [17], roughly half as fast [27]. Trade services in the PPI are distributor margins, and final demand trade services fell 0.2 percent in August [12].
Fuel is the clearest case. Diesel accounted for nearly two-thirds of the 1.8 percent rise in processed goods for intermediate demand [15]. It reached freight rates inside the same month. Prices for truck transportation of freight rose 2.0 percent [10] and final demand transportation and warehousing services rose 2.3 percent [11], a series Richter puts at 10.3 percent over 12 months [19].
The recent monthly path argues against reading straight acceleration into this. Final demand compounds to about 0.4 percent across June, July and August, roughly 1.6 percent annualized [32], against an unadjusted 12-month rate of 5.4 percent. The monthly figures are seasonally adjusted and the annual one is not [3]. Richter reports that July was revised higher [24], and has core goods at 5.0 percent year over year, in the same range for four months and the highest since February 2023 [18]. Final demand food prices rose 0.1 percent over the year [20].
There are two readings. In the first, a diesel spike passed through an otherwise flat quarter and unwinds when crude does. In the second, the pressure sits underneath energy. Processed materials less foods and energy rose 0.5 percent in August [26], and unprocessed nonfood materials less energy rose 2.1 percent [25]. The ex-trade core printed 0.4 percent in July and 0.3 percent in August, which compounds to about 4.3 percent annualized [31]. I lean to the second, because July's 0.4 percent came before the fuel move, and 0.4 percent a month is 4.9 percent a year [30]. A September ex-trade core at 0.1 or 0.2 percent, with the goods leg reversing, would settle it the other way.
Richter wants the FOMC to act now. He wrote that the 12 voting members, chaired by Warsh, "need to quit dilly-dallying around and vote for rate hikes, because this kind of inflation deeper in the economy is nothing to be trifled with" [21][22]. He also notes that consumer-facing measures are somewhat less hot than business inflation, with CPI due the day after the September 10 release [33][16]. On the quarterly GDP-based measure, prices for the whole economy rose 6.4 percent annualized in Q2 from Q1 and 4.4 percent year over year [23].
What to watch
- September's final demand less foods, energy and trade services print: 0.1 or 0.2 percent supports the one-commodity reading, another 0.3 or 0.4 percent does not.
- Any reversal in diesel, which carried over a third of the final demand goods rise and nearly two-thirds of the processed intermediate goods rise.
- Whether the CPI released the day after this report stays below the business-side numbers, as Richter says consumer measures have been.
Information, not investment advice. This story is general information about companies and markets, drawn from cited reporting. It is not a recommendation to buy, sell or hold any security; check the cited sources before acting.
Clarity's read
What the record supports and how the coverage leans. The claims behind it follow.
Reality
- Evidence88
- Adoption
- Not scored
- Hype gap+18
- Incentives40
- Confidence74
Claim ledger
Ranked by verification strength, evidence, and original report placement.
- [1]
The Producer Price Index for final demand moved up 0.4 percent in August 2026, seasonally adjusted.
- [2]
Final demand prices rose 0.1 percent in July 2026 and decreased 0.1 percent in June 2026.
- [3]
On an unadjusted basis, the index for final demand increased 5.4 percent for the 12 months ended in August 2026.
- [4]
In August the index for final demand goods advanced 1.1 percent and prices for final demand services increased 0.1 percent.
- [5]
The index for final demand less foods, energy, and trade services rose 0.3 percent in August after moving up 0.4 percent in July.
- [6]
For the 12 months ended in August, prices for final demand less foods, energy, and trade services advanced 4.7 percent.
- [7]
Over three-fourths of the 1.1 percent rise in final demand goods can be attributed to prices for final demand energy, which moved up 4.2 percent.
- [8]
Over a third of the August increase in the index for final demand goods can be traced to prices for diesel fuel, which jumped 24.1 percent.
- [9]
Margins for fuels and lubricants retailing decreased 11.3 percent in August.
- [10]
Prices for truck transportation of freight advanced 2.0 percent in August.
- [11]
The August advance in final demand services can be attributed to a 2.3-percent rise in prices for final demand transportation and warehousing services.
- [12]
The index for final demand trade services moved down 0.2 percent in August.
- [13]
The index for processed goods for intermediate demand moved up 1.8 percent in August after falling 0.4 percent in July, with over 80 percent of the advance attributable to processed energy goods, which increased 7.3 percent.
- [14]
For the 12 months ended in August, the index for processed goods for intermediate demand advanced 11.5 percent.
- [15]
Nearly two-thirds of the August rise in the index for processed goods for intermediate demand can be traced to a 24.1-percent increase in prices for diesel fuel.
- [16]
The BLS Producer Price Index news release for August 2026 was transmitted at 8:30 a.m. ET on Thursday, September 10, 2026.
- [17]
Wolf Richter reports Core PPI Final Demand, which excludes energy and food components, rose 4.6 percent year-over-year and 0.16 percent month-to-month (2.0 percent annualized).
- [18]
Wolf Richter reports the PPI for core goods, excluding energy and food, rose 5.0 percent year-over-year, has been in this range for the past four months, and is the highest since February 2023.
- [19]
Wolf Richter reports the transportation and warehousing PPI spiked 10.3 percent year-over-year and 1.2 percent month-to-month (15.1 percent annualized).
- [20]
Wolf Richter reports the PPI final demand for food rose 0.1 percent year-over-year and 0.1 percent month-to-month.
- [21]
Wolf Richter wrote that the FOMC voting members "need to quit dilly-dallying around and vote for rate hikes, because this kind of inflation deeper in the economy is nothing to be trifled with".
- [22]
Wolf Richter identifies the Fed as the 12 voting members of the FOMC, chaired by Warsh.
- [23]
Wolf Richter reports the inflation rate for the overall economy, released quarterly with GDP data, rose 6.4 percent annualized in Q2 from Q1 and 4.4 percent year-over-year.
- [24]
Wolf Richter reports that the July PPI readings were revised higher.
- [25]
Unprocessed goods for intermediate demand advanced 1.1 percent in August, with nearly 60 percent of the rise attributable to unprocessed nonfood materials less energy, which moved up 2.1 percent.
- [26]
The index for processed materials less foods and energy rose 0.5 percent in August.
- [27]
The BLS ex-foods-energy-trade monthly rise of 0.3 percent is close to twice Richter's core measure of 0.16 percent for the same month.
- [28]
The 12-month rate for processed goods for intermediate demand exceeds the 12-month final demand rate by 6.1 percentage points.
- [29]
Processed intermediate goods inflation is running about 2.1 times the 12-month final demand rate.
- [30]
A 0.4 percent monthly rise, sustained, compounds to about 4.9 percent over a year.
- [31]
The July and August ex-foods-energy-trade prints of 0.4 and 0.3 percent compound to about 0.7 percent over two months, or roughly 4.3 percent annualized.
- [32]
June, July and August final demand changes of -0.1, +0.1 and +0.4 percent compound to about +0.4 percent over three months, roughly 1.6 percent annualized.
- [33]
Wolf Richter writes that consumer-facing inflation is tracked by the CPI, to be released the day after the PPI, and by the PCE price index, and that those are somewhat less hot than inflation for businesses.
Sources
2 independent publishers whose own reporting we read for this story.
- Producer Price Index News Release - 2026 M08 Results
bls.gov
1 article · September 12, 2026
- wolfstreet.comPPI Shows Surging Inflation Across Prices that Companies Pay Each Other. The Fed Should Stop Dilly-Dallying Around
1 article · September 10, 2026
Topics and entities
Topics
- Federal Reserve Policy
- Freight and logistics costs
- Producer price inflation
- US Inflation
- Diesel and Fuel Costs