Rate-Hike Odds Jump As Fuel Costs Push US Producer Prices Higher

In a relatively unusual turn around, US producer prices hit today ahead of tomorrow's CPI. Interestingly Consumer prices get all the headlines, it is PPI that offers the most read-throughs for Core PCE - The (old) Fed's favorite inflation gauge).

Headline producer pries were expected to rebound significantly from July's flatline as oil prices rebounded on re-escalations in the MidEast, and they printed right in line, up 04.% MoM in August (with July's revised up to +0.1% MoM. That lifted the annual PPI gain to +5.4% YoY (hotter than expected)...

Energy has flipped from deflation to re-inflation...

Core PPI (Ex Food and Energy) rose a cooler than expected 0.2% MoM (+0.3% MoM exp), and pulled Core producer prices up 4.6% YoY (as expected)...

Goods inflation is re-accelerating while Services inflation is slowing...

Energy was the biggest driver with Transportation and Warehousing costs jumped while Trade costs deflated...

Higher crude, higher PPI Energy...

Fuel costs were the biggest driver within Energy/Commodities..

And that has lifted rate-hike odds for next week...

Will Warsh deliver another major surprise (not hike)?