HVAC wholesale prices hold steady in September as broader producer prices surge

A figure that tracks U.S. wholesale prices of HVAC equipment remained nearly flat in September, according to the Bureau of Labor Statistics (BLS), while broader wholesale inflation surged.

What’s happening: The BLS on Thursday released September producer price indexes (PPI) for an array of industries, which measure the average change over time in the selling prices domestic manufacturers receive for their products. 

• An HVAC-specific PPI rose 0.16 percent during the month, compared to the prior, and is up 5.7 percent year-over-year. 
• Compared to September 2021, the HVAC index is up more than 42 percent.

Zoom out: Because PPI measures wholesale price changes — before they reach consumers — it’s widely seen as a leading indicator of inflation. 

• The overall, economy-wide PPI rose 1.3 percent month-over-month in September, nearly three times economists’ expectations, driven largely by higher energy prices — and putting the figure up 6.3 percent on an annual basis.
• The index is up nearly 24 percent over the past five years, trailing the HVAC-specific PPI by roughly 18 percentage points. 

The big picture: Thursday’s release marks the fastest monthly producer-price increase since March 2022. 

What they’re saying: “The jolt to transportation prices affects every good in the economy, since inputs to manufacturing move to factories, and goods at all stages of production move from producer to wholesaler to retailer by truck, train or rail,” said Carl Weinberg, chief economist at High Frequency Economics. “This is how increases in energy prices ‘bleed through’ to prices of core goods.”

Looking ahead: October PPI will be released in mid-November. 

• Global brokerages expect ⁠the Federal ⁠Reserve to raise interest rates in December, after Wednesday data showed consumer prices accelerating in September.