Fuel prices soared as wholesale inflation jumped last month by most in four years

Fuel costs push prices higher

Wholesale inflation rose more than expected in September, driven by a sharp increase in fuel costs. The 1.3% monthly rise followed a 0.5% increase in August and marked the biggest monthly gain since March 2022.

The increase adds to concerns about persistent price pressures for consumers. Rising costs have also become a political issue for Republicans ahead of the midterm elections.

Core prices also accelerated

Prices excluding food and energy rose 0.7% between August and September, compared with a 0.2% increase the month before. On a yearly basis, core prices were up 5%, versus 4.6% in August. The figures show that price increases were not limited to volatile food and energy categories.

Inflation weighs on households

Ongoing inflation has reduced Americans’ purchasing power and weakened consumer sentiment about the economy. The Labor Department reported that average weekly pay, after adjusting for inflation, was lower last month than a year earlier. That was the first annual decline in inflation-adjusted weekly pay since May.

Fed weighs its next steps

The Federal Reserve is scheduled to hold a policy meeting in two weeks and is expected to leave its main short-term interest rate unchanged. Officials had previously indicated another rate increase later this year. Economists mostly expect that increase to come in December.