Wholesale prices jumped 6.3% annually in September, biggest gain since 2022 — SkimNews
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- Bureau of Labor Statistics reported PPI rose 1.3% in September and 6.3% annually, the largest monthly gain since March 2022 and the largest annual gain since December 2022, beating Dow Jones economist forecasts of 0.6% and 5.5%.
- Energy prices drove the surge, with the BLS noting nearly half of September's increase in processed goods for immediate demand stemmed from diesel fuel costs tied to Middle East conflict oil supply disruptions.
- Core PPI — excluding food, energy, and trade — climbed 0.5% monthly and 5% annually, signaling inflation pressure extends well beyond volatile categories.
- Wednesday's CPI release showed consumer prices rose 0.6% monthly and 3.7% annually, with core CPI up 0.3% monthly and 2.6% annually — both also exceeding economist expectations.
- Fed funds futures traders now price in a 34% chance of a rate hike at the Fed's October meeting, up from under 18% a week prior, according to CME's FedWatch tool.
- Chris Zaccarelli, chief investment officer at Northlight Asset Management, said that with a second consecutive day of higher-than-expected inflation, the Fed 'will have no choice but to raise rates again this year.'
- Retail sales rose 0.8% in September, but excluding autos and gas stations the gain was just 0.25%, down from roughly 1.1% in August — evidence that high fuel costs are forcing consumers to tighten spending elsewhere.
Why it matters: The Fed's October rate decision just became more consequential: traders now price a 34% chance of a hike, nearly double the 18% from a week ago, after back-to-back PPI and CPI surprises. Consumers are already pulling back — retail sales excluding autos and gas stations slowed to 0.25% in September from 1.1% in August, showing fuel costs are squeezing discretionary spending.
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