Wholesale prices in the U.S. surged 6.3% annually in September, marking the largest gain since 2022. The producer price index (PPI) also climbed 1.3% on a monthly basis, exceeding economists' expectations of a 0.6% increase. The data, released by the Bureau of Labor Statistics, highlights persistent inflationary pressures, particularly from energy costs driven by the ongoing U.S. conflict with Iran.
Energy prices were a significant contributor to the rise, with the core PPI, which excludes volatile food and energy prices, increasing 0.7% monthly and 5% annually. The report noted that nearly half of the increase in processed goods for immediate demand was linked to rising diesel fuel prices. This underscores the broader impact of soaring energy costs on other sectors.
Recent economic reports have consistently shown inflation's continued grip on consumers and businesses. The consumer price index (CPI) rose 0.6% from August to September and 3.7% annually, surpassing forecasts. Retail sales grew 0.8% in September, although this marked a slowdown from the previous month, indicating that high fuel prices may be prompting consumers to cut back on other spending.
The latest data has led to a shift in expectations for the Federal Reserve's next move. Traders now see a nearly 34% likelihood of a rate hike at the central bank's meeting later this month, up from under 18% a week prior. Chris Zaccarelli, investing chief at Northlight Asset Management, suggested that the Fed may have no choice but to raise rates again this year given the recent inflation reports.