Wholesale prices climbed 1.3% in September, the biggest monthly jump since March 2022, the Bureau of Labor Statistics reported Thursday.
Economists polled by Dow Jones had forecast an advance of 0.6% on the month.
On an annual basis, the producer price index rose 6.3%, up from 5.6% in August and the biggest increase since December 2022.
The producer price index tracks what companies pay before goods and services reach store shelves, which makes it an early read on consumer prices.
Energy did most of the damage, with a stronger than expected energy gain of 10.8% on the month, exceeding March's 10.5%. Gasoline, home heating oil, and diesel each rose close to 20%.
The pressure is spreading past the gas pump
Core producer prices, which strip out food and energy, rose 0.7% in September and 5% over 12 months.
Services prices gained 0.8%, the strongest reading since January. Transport and warehousing, sensitive to Middle East developments, surged 3.4%. Food prices firmed 1.2% after three straight monthly declines.
The Middle East conflict has curtailed oil supply, and the resulting price spike is now showing up in categories well beyond fuel.
Consumer prices told a similar story a day earlier. The consumer price index rose 0.6% in September, lifting the annual rate to 3.7%, with gasoline prices up 9.1% accounting for more than half of the monthly increase.
The Fed meets in two weeks
The central bank raised rates last month for the first time since July 2023, and the next Fed meeting runs October 27 and 28.
September's data has pushed market expectations toward another hike. Retail sales rose 0.8% on the month, and initial claims, the Philadelphia Fed index, and the Empire State survey all pointed to a firm economy.
A strong economy gives policymakers more room to tighten without worrying about tipping growth over.
For investors, the setup is familiar from 2022. Higher rates raise borrowing costs for companies and pressure valuations on anything priced for cheap money.
The wildcard is oil. Producer price gains driven by a supply shock can fade fast if the conflict eases, which would take the pressure off the Fed before year-end. Until then, every fuel-related line item in the next inflation report carries outsized weight.
