From Dallas Express · Dallas Express · · 1m 40s
Wholesale prices jump 5.4% as diesel spikes
August producer inflation ran hotter than forecast, and a 24% diesel jump landed days before the Fed decides on rates.
In brief
August producer inflation ran hotter than forecast, and a 24% diesel jump landed days before the Fed decides on rates. Energy, especially diesel, drove most of August's wholesale inflation, and it pushed the odds of a Fed rate hike to about 70%. Originally reported by Dallas Express.
Wholesale inflation runs hot
The Producer Price Index rose 0.4% in August, matching forecasts. Year over year it hit 5.4%, just above the 5.3% economists expected, after a revised 0.1% rise in July.
Diesel leads the surge
Final-demand energy prices jumped 4.2% in the month. Diesel alone surged 24.1%, doing most of the work behind the August number.
“diesel prices surged 24.1% during the month”
Goods rose, services barely moved
Goods prices climbed 1.1% while services managed only 0.1%. Transportation and warehousing rose 2.3%, the kind of cost that travels down a supply chain into store shelves.
The increase spread wider
Airfares rose 4.2%. Hospital care and physician services got pricier, and electronic components are under pressure from AI data center demand.
Core tells a softer story
Strip out food and energy and PPI rose just 0.2%, below the 0.3% expected. Food edged up 0.1% and electric utility prices fell, though core is still 4.6% above a year ago.
Traders bet on a hike
Futures markets lifted the odds of a quarter-point Fed hike at the September 15-16 meeting to about 70%, up from 62% before the report, per Reuters.
Next data point is CPI
The August Consumer Price Index lands September 11 and will show whether price pressure is broadening or staying in energy. Crude moved above $100 a barrel on Middle East tensions.
The takeaway
Energy, especially diesel, drove most of August's wholesale inflation, and it pushed the odds of a Fed rate hike to about 70%.
