Wholesale prices jumped sharply in September, climbing at the fastest monthly pace in more than four years as surging energy costs continue to squeeze the economy.
Producer prices rose 1.3 percent from August to September, according to data from the Bureau of Labor Statistics (BLS). The increase, measured by the producer price index (PPI), is the largest since producer prices climbed 1.7 percent from February to March 2022.
That 2022 spike came just months before inflation hit a 40-year high.
On an annual basis, producer costs were up 6.3 percent in September, the biggest year-over-year increase since December 2022, the BLS data showed. Wholesale prices had also risen 0.5 percent from July to August and 0.2 percent from June to July.
September’s hot reading blew past economists’ expectations. Experts surveyed by The Wall Street Journal had projected a monthly PPI increase of 0.6 percent and an annual increase of 5.5 percent.
Energy was the main culprit. Spiking energy costs accounted for more than 80 percent of September’s increase in producer prices, with the PPI for energy soaring 10.8 percent from August.
The energy sector remains hampered by spillover effects from the Iran war, as the Islamic Republic has restricted shipping through the crucial Strait of Hormuz. West Texas Intermediate crude oil, the North American benchmark, was trading above $96 per barrel as of Thursday morning.
Oil prices also climbed after the Iran-backed Houthis launched deadly attacks on airports in Saudi Arabia in recent days.
The latest wholesale numbers landed just one day after the BLS reported that annual inflation reached 3.7 percent in September, as measured by the consumer price index (CPI). That marked the largest year-over-year jump in consumer prices since May, when CPI inflation stood at 4.2 percent.
Gas prices were a major driver on the consumer side as well. Increases in gas prices accounted for more than half of the rise in consumer prices from August to September, the numbers show.
Taken together, the CPI and PPI reports signal that inflation is not heading down toward the Federal Reserve’s 2 percent target.
That puts pressure on the central bank, whose officials will meet later this month to decide whether to raise interest rates for a second straight meeting.
Economists warn that the higher costs businesses are facing will likely end up hitting consumers’ wallets.
Heather Long, chief economist at Navy Federal Credit Union, said Thursday it is “inevitable” that companies will pass elevated costs on to consumers.
“It’s yet another reason this fight against inflation is likely to be longer than anyone wants,” Long wrote on social platform X.
The fresh data adds to a string of troubling signs on inflation, with both producer and consumer prices moving in the wrong direction as energy markets remain under strain from turmoil in the Middle East.
All eyes now turn to the Federal Reserve’s upcoming meeting, where officials will weigh how to respond to the latest inflation figures.
[READ MORE: Michigan Senate Hopeful Abdul El-Sayed Faces Questions After Denying Family Ties to Muslim Brotherhood]
