Wholesale inflation much hotter than expected as soaring energy costs threaten price hikes through holidays

Wholesale inflation came in much hotter than expected in September – a sign that Americans could face more pain from soaring energy costs through the holiday season. The Producer Price Index jumped 6.3% over the past 12 months – the largest annual increase since December 2022 and far above expectations it would cool to 5.3%, the Bureau of Labor Statistics said Thursday. It rose at a stunning 1.3% pace over the month, much higher than estimates of a 0.5% rate and also the fastest monthly increase since March 2022.Core PPI – which excludes volatile food and energy costs – rose 0.5% over the month, also above estimates of a 0.3% pace. Tracy Schuchart, senior economist at NinjaTrader, said the data means more price hikes are on the way, noting that big-box retailers like Walmart and Costco warned on recent earnings calls that they would no longer be able to absorb cost increases. “We’ll see this going into the Christmas season, certainly, because oil prices and fuel prices have been much higher for much longer than anyone had thought.We’re going on eight months now,” Schuchart told The Post. On Wednesday, data showed the Consumer Price Index rose 3.7% over the past 12 months through September – also hotter than expected. “With a second day in a row of higher-than-expected inflation numbers, it seems the Fed will have no choice but to raise rates again this year,” Chris Zaccarelli, chief investment officer for Northlight Asset Management, wrote in a note Thursday.“While we don’t expect them to raise rates later this month (because it is so close to the midterm election), we do think that they will increase the Fed Funds rate another 25 bps in December.” The majority of traders are expecting the Fed to hold rates in the key 3.75% to 4% range at their meeting later this month.

Traders priced in roughly 65% odds the Fed will hike by a quarter point in December, with some even expecting a half-point hike, according to CME FedWatch. The Do...