Wholesale inflation jumped last month to the highest rate in four years as gas prices soared

WASHINGTON– Wholesale inflation rose more than expected last month due to a sharp rise in fuel prices, with rising prices becoming a bigger economic challenge for millions of Americans and a growing political problem for Republicans in the upcoming midterm elections.

The Labor Ministry’s producer price index – which measures inflation before it reaches consumers – climbed 6.3% in September year-on-year, up from 5.6% in August and the biggest increase since December 2022, the government announced Thursday.

On a monthly basis, wholesale prices increased by 1.3% from August to September, representing the largest increase since March 2022, following a 0.5% increase in the previous month.

Thursday’s data boosts the better-known consumer price index, released Wednesday, which also accelerated in September with rising gasoline prices. A wide range of goods and services have also become more expensive. The two inflation reports increase pressure on inflation fighters at the Federal Reserve to raise their key interest rate. Inflation now exceeds the 2% target set by the central bank for five and a half years.

Excluding the volatile food and energy categories, underlying prices rose 0.7% from August to September, up sharply from 0.2% the previous month. Compared to last year, underlying prices increased by 5%, compared to 4.6% in August.

More expensive energy is driving most of the rise, with wholesale gas prices soaring more than 20% between August and September. But the report also shows that other costs are increasing, including those for electricity, vegetables, transportation and plane tickets.

Continued inflation has eroded Americans’ incomes and soured most consumers on the economy. The Labor Department said Wednesday that average weekly wages, adjusted for inflation, fell last month from a year ago for the first time since May.

Rising prices have also hurt Trump’s reputation with American voters. A poll released this month by The Associated Press-NORC Center for Public Affairs Research found that only 17% of American adults approve of Trump’s handling of the cost of living. And only 26% approve of his overall management of the economy, a new low.

The Federal Reserve, meanwhile, will hold a policy meeting in two weeks and is expected to keep its key short-term rate unchanged. But officials had already forecast another rate hike later this year, which economists generally expect to occur in December.

The Fed is raising borrowing costs to try to slow borrowing and spending and bring down inflation.