The BLS released September Producer Price Index numbers this morning. PPI has been gradually accelerating since late 2015/early 2016, but recent months saw PPI begin to slow by its headline measure. The headline PPI decelerated again last month down to 2.73% YoY from 2.83% the month before. This continues a trend over the past few months of the headline measure surprising lower. Meanwhile, Core PPI which removes food and energy accelerated slightly to 2.48% YoY from 2.4%. A more refined measure of PPI excluding foods, energy, and trade services increased the most, up 3.02% YoY compared to 2.84% in August. This is the first time this measure of core PPI has been higher than the headline number since June 2017. While the headline data may confirm multiple recent Fed members claiming to not see any striking issues concerning inflation on the horizon, the core measures indicate pretty broad price pressures after removing volatile components (food, energy) and margins for retail and wholesale operators.

We also like to look at the PPI index for Select Health Care Industries, which the BEA uses as a direct input for PCE Health Care. As shown below, the PPI measure shows that health care inflation continues to run at a reasonably strong clip and about in-line with core inflation.