Prices for the people who make the things we buy — producers — shot up in September. As measured by the producer price index, inflation came in at 8.5% on a year-over-year basis. That’s an improvement over August, July and June, but an ugly number plain and simple. 

“We’re not out of the woods yet as it relates to price pressures,” said John Leer, chief economist with Morning Consult. “Clearly producers are continuing to experience elevated price growth, and I would expect that to continue to impact consumer inflation going forward.” 

The big drivers for producers were food and especially services.  

“A lot of that is being driven by elevated labor costs. That is a function of the tight labor market,” Leer said.

That of course gets to the heart of what is so dangerous about this economic moment. To ease inflation, the labor market probably needs to slow down. And a slowing labor market can very quickly look like recession.

Still, producer prices are different from consumer prices, and for Thursday’s consumer price index, there are signs that inflation could be fading.

Take, for example, used cars. 

“Used cars led the inflation on the way up, they’re likely to lead the inflation on the way down,” said Alan Detmeister, economist at UBS. 

He said wholesale used car prices have declined nearly 8% in 11 weeks. 

Apparel prices may be on the verge of falling significantly, said Omair Sharif with Inflation Insights.

“You’re reading a lot more about apparel being discounted heavily at, you know, at Walmart, Target, Kohl’s,” Sharif said. “So everyone is trying to move inventory.”

Sharif said that when you look at month-to-month changes, Thursday may finally bring some good inflation news. 

“I basically think tomorrow is going to be the start of a string of much lower core inflation readings of the type that the [Federal Reserve] has been waiting to see all year,” he said.

Now, that leaves out food and energy, and we do need to travel and we do need to eat. Those items are notoriously volatile and hard to forecast.