Wholesale inflation hits levels not seen since 2022

Fuel pushes wholesale prices higher

The Labor Department said its producer price index rose 6.3% in September compared with a year earlier, up from 5.6% in August. The index measures price changes before goods and services reach consumers.

From August to September, wholesale prices increased 1.3%, following a 0.5% rise the previous month. The monthly gain was the largest since March 2022, while the annual increase was the biggest since December 2022.

Wholesale gasoline prices surged more than 20% during September. Electricity, vegetables, shipping and air fares also became more expensive, according to the report.

Shipping costs spread through economy

Transportation and warehousing prices rose 3.4% in September and stood 16% above their level a year earlier. The report linked the increase to higher fuel costs, especially diesel used by freight trains and long-haul trucks.

Carl Weinberg, chief economist at High Frequency Economics, wrote that rising transportation costs affect goods throughout the economy as materials and products move between producers, wholesalers and retailers. Diesel averaged $6.32 a gallon nationwide on Thursday, according to AAA, compared with $3.66 a year earlier. Farmers also depend on diesel to operate much of their equipment, adding to concerns about food costs.

Food and core costs rise

Wholesale food prices climbed 1.2% from August to September, although they were unchanged from a year earlier. Food prices had appeared to cool this year before the latest monthly increase.

Core prices, which exclude food and energy, rose 0.7% in September after a 0.2% increase in August. Their annual increase accelerated to 5%, from 4.6% the month before.

Fed weighs next interest-rate move

The two inflation reports increase pressure on the Federal Reserve, whose inflation target is 2%. Inflation has remained above that goal for five and a half years. The Fed will meet in two weeks and may leave its key short-term rate unchanged. After this week’s inflation reports, however, some economists expect a possible increase; officials have indicated at least one more hike this year.

Fed Chairman Kevin Warsh is scheduled to speak late Thursday at an international economic conference in Bangkok. His remarks will be watched for indications of his position on a rate increase this month.

Inflation weighs on voters

Rising prices have eroded Americans’ incomes and contributed to widespread dissatisfaction with the economy, the report said. The issue is also described as a political challenge for Republicans ahead of the midterm elections.

An AP-NORC poll found about 8 in 10 registered voters disapprove of President Trump’s handling of the cost of living. About three-quarters disapprove of his handling of the economy.