Wholesale inflation jumped last month by most in four years as gas prices soared
Wholesale inflation rose more quickly than expected last month on a big jump in fuel costs, a sign that stubbornly rising prices remain an economic challenge for consumers and a political problem for Republicans in the midterm elections
WASHINGTON -- Wholesale inflation rose more than expected last month on a big jump in fuel costs as rising prices become a bigger economic challenge for millions of Americans, and a growing political problem for Republicans in the upcoming midterm elections.
The Labor Department’s producer price index — which captures inflation before it reaches consumers — soared 6.3% in September from a year ago, up from 5.6% in August and the biggest increase since December 2022, the government said Thursday.
On a monthly basis, wholesale prices rose 1.3% from August to September, marking the largest increase since March 2022, after a 0.5% gain the previous month.
Thursday’s data amplify the better-known consumer price index, released Wednesday, which also accelerated in September as gas prices jumped. A broad range of goods and services also got more expensive. Both inflation reports raise pressure on the inflation-fighters at the Federal Reserve to hike their key interest rate. Inflation has now topped the central bank’s 2% target for five and a half years.
Excluding the volatile food and energy categories, core prices rose 0.7% from August to September, up sharply from 0.2% in the previous month. Compared with a year ago, core prices rose 5%, up from 4.6% in August.
More expensive energy drove most of the increase as wholesale gas prices soared more than 20% from August to September. But the report also showed other costs rising, including those for electricity, vegetables, shipping, and air fares.
Ongoing inflation has eroded Americans' incomes and soured most consumers on the economy. The Labor Department said Wednesday that average weekly paychecks, when adjusted for inflation, shrank last month compared with a year ago for the first time since May.
Higher prices have also taken a toll on Trump’s standing with U.S. voters. A poll released this month by The Associated Press-NORC Center for Public Affairs Research found that just 17% of U.S. adults approve of Trump's handling of the cost of living. And only 26% approve of his handling of the economy overall, a new low.
The Federal Reserve, meanwhile, will hold a policy meeting in two weeks and are expected to keep its key short-term interest rate unchanged. But officials had already penciled in another rate hike later this year, which economists mostly expect to occur in December.
The Fed raises borrowing costs in an attempt to slow borrowing and spending and bring down inflation.