More Bad News on Inflation as Wholesale Prices Surge

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More Bad News on Inflation as Wholesale Prices Surge

It looks like more inflation is in the pipeline.

The Bureau of Labor Statistics reported Thursday that the producer price index rose 1.3% from August to September, contributing to an annual wholesale inflation rate of 6.3%. The monthly increase was the largest since March 2022, during the pandemic-era price surge, and roughly twice as high as analysts had expected. The annual increase was the largest since December 2022.

The PPI measures prices recorded by domestic producers for their output, closely tracking wholesale prices. A big jump in the PPI indicates that retail prices will likely rise in the coming months as higher costs work their way through the economy.

The new data comes on the heels of a report Wednesday that annual consumer inflation was 3.7% in September - another unpleasant surprise for Americans struggling to make ends meet amid a multi-year inflationary wave.

"Another day, another hot inflation report," Heather Long, chief economist at Navy Federal Credit Union, wrote on X. "Every category of business inflation was hot, even after stripping away energy costs. It's inevitable that companies will pass some of these costs along to consumers."

Alex Pelle, senior U.S. economist at Mizuho Securities, said the report could push the Federal Reserve to raise interest rates again at its next meeting at the end of the month. "On the economic data alone, there is little reason for the Fed to hesitate," Pelle wrote, per CNBC.

Consumers have nowhere to turn to escape the squeeze from one of the essential products of American life, said Michael Pearce, chief U.S. economist at Oxford Economics. "Higher gas prices are beginning to bite because, unlike earlier in the year, there's no offset this time around from fiscal policy," he wrote in a note to clients, per CNN. "We estimate the cumulative additional spend on gasoline so far this year now outweighs the rise in tax refunds from a year ago."

Quotes of the Day

"We will do a reconciliation bill - one way or the other we will. Obviously, if we lose control of Congress, it'll be the Last Supper."

− Republican Sen. Bernie Moreno of Ohio, speaking to reporters at the Capitol Thursday. Moreno said Republicans intend to pass a "giant" bill that would include "all the Republican priorities that we can get done" after the midterm elections, using the reconciliation process that would allow them to pass the legislation with no Democratic support.

Losing control of the House or the Senate would provide extra motivation to get the bill done, Moreno said. Republicans could also raise the debt ceiling during the final months of the current Congress, the he added, eliminating any leverage Democrats might have next year when it comes time to address the nation's debt limit once again.

"If we lose the House and the Senate, we should be here from Nov. 9 until Dec. 31 with no break at all," Moreno said. "Like, we'll have turkeys here for Thanksgiving because we have to get this done."

"DOGE will go down as one of the biggest disasters in American history."

− Robert Califf, a former commissioner of the Food and Drug Administration during the Obama and Biden presidencies, as quoted by STAT criticizing the Elon Musk-led program that slashed staffing at the agency responsible for protecting public health by regulating pharmaceuticals and ensuring the safety of the U.S. food supply and other products.

Califf and two other former FDA chiefs who served under President Trump, Scott Gottlieb and Ned Sharpless, all blasted the DOGE staffing cuts Wednesday at a STAT conference in Boston. "You lost a lot of institutional memory," Gottlieb reportedly said.

The former officials reportedly warned that it will take time for the agency to rebuild the knowledge base that has been lost, but they also offered some praise for the FDA's current leadership, following the resignation of former Commissioner Marty Makary in May.

"Now we have, I think, sensible leadership that's doing smart things in the organization. I think things have gotten back to people feeling confident that the regulatory agency is making rational decisions," Gottlieb reportedly said.

Number of the Day: $10 Billion

Advertising spending for the 2026 midterm elections has now topped $10 billion and is on pace to end up at $11.6 billion, exceeding the ad total of the 2024 presidential election cycle, The New York Times reports.

"That $10 billion, by way of comparison, is more than the amount of ticket sales at the North American domestic box office last year, more than the amount grossed by the top 100 concert tours combined last year and more than the total amount of advertising booked during the 2025-26 N.F.L. season," writes Theodore Schleifer of The Times.

Republican advertisers are reportedly spending about 11% more than Democratic ones, and the GOP's Senate Leadership Fund super PAC is on track to spend more than $300 million on its own, making it the top advertiser. Spending by affiliated groups lifts the total spending by the Senate Leadership Fund's network to about $643 million, Schleifer writes.

Fiscal News Roundup

• Secret Documents Reveal Donors Behind $330 Million for Trump's Ballroom – Washington Post
• Wholesale Prices Jumped 6.3% Annually in September, Biggest Gain Since 2022 – CNBC
• As Inflation Rises, More Than 40 Percent Say They Struggle to Pay for Basic Necessities: Pew – The Hill
• Despite Bad Inflation Report, Trump Says Economy Is Doing Fine – NPR
• Frustrated With Trump, Voters Overwhelmingly Want Change in Washington, an AP-NORC Poll Finds – Associated Press
• Trump's Approval Rating Hits Record Low in Fox News Poll – The Hill
• CEO Confidence Drops Into Negative Territory – Axios
• IEA Agrees to Release of Outstanding 100 Million Oil Barrels – Bloomberg
• Bipartisan House Group Urges Trump to Enforce Russia Sanctions, Scrap Diesel Deal – Politico
• The Education Department Is Preparing to Offload Its Student Loan Office – Washington Sun
• FAA Seeks Ownership Stake in Air Traffic AI Company – Politico
• White House Probes Claims of Missing Kennedy Center Money in "MAGA Blood Feud" – Axios
• Moreno Targets Data Center Incentives With 100% Tax – Politico
• Ways & Means Next Republican Gavel Race Underway – Punchbowl News
• Former FDA Officials Blast DOGE as 'One of the Biggest Disasters in American History' – STAT

Views and Analysis

• The Too-Hot-for-Comfort Economy – Neil Irwin, Axios
• Trump Has Brought Inflation Back to the Heartland – Jonthan Levin, Bloomberg
• Inflation Keeps Biting Real Wages – Wall Street Journal Editorial Board
• Why a $2 Trillion Deficit and 5% Treasury Yields Are Becoming America's Biggest Economic Challenge – Matt Peterson, CNBC
• America Needs More Capital – Larry Fink, Wall Street Journal
• Is the K-Shaped Economy Really More of an E? – Robert Armstrong, Financial Times
• Why Democrats Are Looking to Katherine Clark to Bring 'Order' to the House – Riley Rogerson, Politico
• It Was Meant to Stop Surprise Bills. It Cost Americans $17 Billion Instead – Jackson Hammond and Brian Blase, Washington Post
• The California Wealth Tax French Connection – Joseph C. Sternberg, Wall Street Journal
• Buyer Beware: New Medicare Plans Have Fewer Benefits, Higher Costs – Anna Wilde Mathews, Wall Street Journal
• Trump's Great Gift to Chinese Automakers – Ryan Cooper, American Prospect
• They Came to Washington to Dismantle Government. Now, They're Profiting From It – Faiz Siddiqui, Elizabeth Dwoskin and Meryl Kornfield, Washington Post