Energy rebound lifts August producer inflation to 5.4%

U.S. producer prices rose 0.4% in August as energy prices rebounded after two months of declines, lifting annual inflation to 5.4%. A sharp increase in diesel prices helped reverse the summer retreat in goods prices, while the broader services index barely moved.

The September 10 report from the Bureau of Labor Statistics showed a stronger monthly increase than July’s 0.1% rise and June’s 0.1% decline. Annual inflation climbed from 4.8% in July, although it remained below May’s 5.9% reading.

Beneath that acceleration, the picture was mixed. Prices excluding foods, energy and trade services increased 0.3%, slightly less than July’s 0.4%. Their annual increase held at 4.7%. Energy explains much of August’s goods rebound, but prices continued rising outside those volatile categories as well.

Monthly changes in the broad indexes below are seasonally adjusted; annual comparisons are unadjusted. In BLS Table 2, diesel’s monthly change is seasonally adjusted, while truck freight carries a footnote identifying unadjusted data because seasonal tests did not indicate seasonality. BLS revised data for April through July to incorporate late reports and respondent corrections. The previous-month figures here reflect that updated record.

Diesel reverses the summer decline in goods prices

Final demand goods prices rose 1.1% after falling 1.4% in June and 0.4% in July. Energy prices increased 4.2%, following declines of 6.8% and 1.8% in those two months. BLS attributed more than three-fourths of August’s goods-price advance to energy. Despite the summer declines, energy prices were 24.4% above August 2025 levels, compared with a 7.7% annual increase for goods overall.

Diesel was the standout: prices jumped 24.1%, accounting for more than one-third of the overall goods increase. Gasoline, jet fuel and home heating oil also became more expensive. The energy increase was not universal, however: residential electricity prices fell 0.5%.

The distinction between a category’s price change and its contribution matters. Diesel’s 24.1% increase describes its own index. Its contribution to goods inflation depends on its weight in the larger basket. Similarly, energy’s more-than-three-fourths contribution applies to the goods increase, not to the entire final demand index, which also includes services.

Outside energy, goods prices excluding foods and energy rose 0.4%, twice July’s pace, and were 5.1% higher than a year earlier. Food prices edged up 0.1% after two monthly declines. Candy and nuts and tobacco products were among the increases BLS identified; fresh sausage and aluminum mill shapes declined. Both the monthly and annual readings show inflation extending beyond fuel, even though fuel supplied most of August’s lift.

Transportation rises as retail and wholesale margins narrow

Final demand services prices increased 0.1%, their third consecutive monthly rise, after gains of 0.5% in June and 0.2% in July. Services prices remained 4.5% above a year earlier, despite August’s modest monthly increase, which concealed a pronounced split.

Final demand transportation and warehousing prices rose 2.3%, reversing July’s 1.1% decline, and were 13.0% higher than a year earlier—well above the annual increase for services overall. BLS attributed the overall monthly services increase to that category and identified a 2.0% rise in truck freight prices as the leading product-level contributor. Airline passenger services also increased, alongside legal services, hospital inpatient care and automobile retailing.

Trade services moved in the other direction, falling 0.2%. These indexes track wholesale and retail margins rather than simply the selling prices of merchandise. Margins for fuels and lubricants retailing dropped 11.3%, even as several fuel-price indexes rose. Those readings describe different parts of the transaction and can move in opposite directions.

Health, beauty and optical goods retailing and machinery and equipment wholesaling also declined. Services excluding trade, transportation and warehousing were unchanged overall, with portfolio management among the decreases. The small services headline thus combines rising transportation prices, declining trade margins and a flat reading across the remaining broad group.

The underlying measure offers a different comparison

The final demand index excluding only foods and energy rose 0.2% in August, slowing from July’s 0.3% increase, according to BLS Table 1 for August 2026. Prices on this measure increased 4.6% from August 2025. The monthly readings are seasonally adjusted; the 12-month comparison is unadjusted. This measure retains trade services, including wholesale and retail margins.

The final demand index excluding foods, energy and trade services removes those margins as well. It rose 0.3% in August and 4.7% over the preceding 12 months. Those readings describe the measure with all three exclusions and are distinct from the food-and-energy-only figures.

Its annual rate was unchanged from July and below the 5.0% readings in May and June. It nevertheless remained above January’s 3.5%. That history adds perspective to August’s energy-led acceleration: the headline rate moved higher, while the measure excluding all three categories maintained its annual pace.

Neither figure alone describes every business’s experience. The report’s detailed indexes show why a freight purchaser, a fuel retailer and a food producer could face very different price movements in the same month.

Business inputs show another energy surge

Intermediate demand measures purchases by domestic businesses of production inputs, including goods, services and maintenance and repair construction, but excludes capital investment. Business capital investment belongs to final demand. August’s intermediate-demand readings showed renewed price increases, too.

Processed goods prices rose 1.8% after falling 0.4% in July, bringing their annual increase to 11.5%. Processed energy rose 7.3% and accounted for more than 80% of the monthly advance. Diesel alone supplied nearly two-thirds. Processed materials excluding foods and energy increased 0.5%, while processed foods and feeds slipped 0.1%.

Unprocessed goods rose 1.1% monthly and 12.8% annually. Here, nonfood materials excluding energy supplied nearly 60% of the monthly increase, rising 2.1%. Nonferrous scrap increased 3.7%, while slaughter cattle fell 6.4%. Unprocessed energy rose 1.5%; foodstuffs and feedstuffs declined 0.1%.

Intermediate services increased 0.3% monthly and 5.1% annually. Transportation and warehousing accounted for about 70% of the monthly gain. Courier, messenger and postal services rose 1.5%, while management, scientific and technical consulting prices fell 4.6%.

The separate production-flow breakdown also showed increases at all four stages. Stage 4 prices rose 0.4%, matching June and July; stages 3 and 2 each increased 0.8%, and stage 1 rose 1.4%. These are complementary views of production transactions, not additional increases to add to final demand inflation.

What producer prices tell businesses—and what comes next

PPI measures changes in selling prices received by domestic producers. Its coverage extends beyond household purchases to areas including business capital investment, exports, government purchases and construction. CPI measures prices from the consumer purchaser’s perspective, while the personal consumption expenditures price index measures prices associated with consumer spending. Their scopes and weights differ, so a 5.4% PPI reading is not a measure of household inflation.

Taxes, subsidies and distribution costs can also separate what a producer receives from what a purchaser pays. Intermediate-price increases do not establish how much, or when, consumer prices will change. The release does not resolve that question.

For businesses, the detailed indexes have immediate uses: BLS notes that they help adjust contracts and compare input and output price movements. August’s fuel and transportation increases are especially relevant to those comparisons, even where aggregate services inflation looks subdued.

The next report, scheduled for October 15 at 8:30 a.m. Eastern, will show whether energy’s rebound persisted and whether transportation continued to outweigh weaker trade margins. Revisions will also matter when judging the summer pattern. August establishes a renewed rise in producer prices; it does not yet establish its durability.