Wholesale inflation surged in September, keeping affordability in focus ahead of the midterms
By Alicia Wallace, CNN
(CNN) — US wholesale inflation jumped in September to its highest level in more than four years, marking the second hotter-than-expected inflation reading this week and adding to concerns about the economy just weeks before the midterm elections.
The Producer Price Index rose 1.3% from the month before and 6.3% from the year before, according to Bureau of Labor Statistics data released Thursday morning. It’s a sharp upswing from August when wholesale prices rose 0.5% to an annual rate of 5.6%.
The latest PPI landed a day after the September Consumer Price Index report showed inflationary pressures were broadening.
The reports of accelerating price hikes come just weeks before the midterms, where affordability – or lack thereof – is expected to factor in heavily for US voters.
Economists had expected September PPI to increase 0.5% from August and 5.3% annually, according to FactSet. Instead, September marked the fastest monthly increase since March 2022 and the highest annual rate since December 2022, the year when US inflation hit a 40-year high.
Energy prices, driven higher by geopolitical conflicts including the war with Iran, drove September’s increase, accounting for 80% of the 2.9% leap in goods prices. That’s the largest-ever monthly increase, according to BLS data that goes back to 2009.
However, businesses are contending with price pressures beyond energy. Core PPI, which strips out food and energy, rose at 0.7%, its fastest rate in five months, lifting the annual rate to 5%, its highest since January 2023.
PPI, which measures the average change in prices received by producers of goods and services, serves as a potential bellwether for what consumers could experience in the months to come. Some of the PPI data also feeds into the Personal Consumption Expenditures price index, which is what the Federal Reserve uses for its 2% target rate.
A separate report from the Commerce Department Thursday showed that Americans pulled back on their spending in September.
US retail sales slowed to 0.8% last month after posting a surprisingly strong 1.3% gain in August, according to the latest monthly report from the Commerce Department.
Retail sales data is adjusted for seasonality but not inflation: When factoring in the pace of monthly price hikes (which rose at an unpalatable 0.6% in September), retail sales fell even flatter.
Stock futures were mixed Thursday morning after the economic data was released: Dow futures held on to slight gains of 0.3%, while S&P 500 and Nasdaq 100 futures held on to losses of 0.3% and 1.2%, respectively.
This is a developing story and will be updated.
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CNN’s John Towfighi contributed to this report.
