Wholesale Prices Jump 6.5% in a Year, the Most Since 2022, as a December Fed Rate Hike Looks Locked In

Wholesale prices rose 6.5% over the past year through October, the largest 12-month increase since November 2022, the Bureau of Labor Statistics reported Friday.

Prices for goods led the way. They climbed 0.5% in October and 10.2% from a year earlier, the biggest annual jump since October 2022.

Wholesale food prices rose 1.3% in a single month. Energy edged down 0.1%, but only after jumping about 10% in September, so fuel costs stayed elevated.

A core gauge that strips out food, energy and trade services rose 0.5% for the second month in a row. It is up 4.9% from a year ago.

On a monthly basis, the overall index rose 0.3%, a bit below the 0.4% that economists expected, CNBC reported. September’s jump was 1.4%.

The cooler monthly number did little to change the picture. Prices for intermediate processed goods, the materials businesses buy to make other products, soared 14.6% from a year earlier.

That was the largest annual gain since July 2022. Truck freight prices rose 3.9% in October alone, adding to the cost of moving goods to store shelves.

Pressure on Shoppers and the Fed

Wholesale costs tend to show up later in what households pay. Diesel, which feeds into the price of groceries and nearly everything else on store shelves, averages $6.06 a gallon, according to AAA.

The Iran war pushed fuel costs higher earlier this year, which has made the wholesale report a closely watched signal of what may be passed on to consumers, ABC News reported.

The report followed this week’s consumer price index, which rose 0.4% in October, a tenth of a point above forecasts. Core consumer prices rose 0.3%.

Federal Reserve officials meet Dec. 8-9. Markets are fully pricing in at least a quarter-point increase in the central bank’s key rate, with slight odds of a half-point move.

The odds of a quarter-point hike stood at about 89%, according to CME Group’s FedWatch tool. A December increase would be the Fed’s second rate hike in four months.

Chicago Fed President Austan Goolsbee said in a CNBC interview Friday that inflation is spreading beyond oil and tariffs.

“If you look at how broad-based the inflation is, it’s not just that we’re above the target and have been for some time,” Goolsbee said.

“It’s that in categories that are not driven by oil prices and not driven by tariffs, you’re still seeing stalled progress and in some cases going the wrong way.”

“We’ve been above 2% for almost six years,” he added. “Inflation is rising; it’s proved far more persistent than we predicted at the beginning from the supply shocks.”

Chris Zaccarelli, chief investment officer for Northlight Asset Management, said the wholesale report showed “some signs of improving, albeit still too-high” and was “unlikely to change the Fed’s approach in December.”

The next producer price report, covering November, is scheduled for Dec. 15, after the Fed’s meeting.

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