Wholesale inflation declined last month yet remains stubbornly elevated
[November 14, 2026] By
CHRISTOPHER RUGABER
WASHINGTON (AP) — Wholesale inflation cooled a bit last month yet
remains elevated, evidence of stubbornly higher prices that have soured
Americans on the economy and fueled big gains for Democrats in the
midterm elections last week.
The Labor Department’s producer price index — which captures inflation
before it reaches consumers — rose 0.3% from September to October, down
from a 1.4% jump in the previous month. Yet compared with a year
earlier, it climbed 6.5%, up from 6.3% in September and the biggest
increase since November 2022, the government said Friday. A year ago,
wholesale inflation was just 3.1%.
Friday’s report suggests prices are still rising at a pace well above
the Federal Reserve's 2% annual target. On Tuesday, the government
reported that the more widely known consumer price index accelerated in
October, driven by rising costs across a wide range of goods and
services. Many Fed officials suggested in response that they will almost
certainly need to raise their key short-term rate further, perhaps more
than once, to combat inflationary pressures in the economy.
When the Fed lifts its rate, other longer-term borrowing costs for
things like mortgages, auto loans, and credit cards also rise.
Excluding the volatile food and energy categories, core prices also rose
0.3% from September to October, down from 0.7% a month earlier. On a
yearly basis, they rose 5%, the same as in September.
Wholesale inflation cooled largely because overall energy prices
levelled off. Yet there were signs that high gas prices are spreading
into other sectors. And the buildout of artificial intelligence data
centers is also pushing up a range of costs.
“Costs for food and transportation climbed sharply as high fuel prices
flow into other parts of the economy," Ben Ayers, senior economist at
Nationwide, wrote in a note. “This creates further upward pressure for
food and broader goods inflation ahead even as oil prices have cooled
over the past few weeks.”
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 The producer price index provides a
signal about where inflation for consumers may be headed.
Wholesale diesel prices dropped 7.9% just from September to October.
Still, the impact of more expensive diesel since the Iran war was
clear in the report: Prices for freight shipped by truck jumped 3.9%
last month, while food prices rose 1.3%. Food, like most goods, is
mostly shipped by truck.
The price of electronic components soared 4.2% and industrial
chemical prices rose 3.1% just last month, a sign of the demand
fueled by the AI buildout.
Economists monitor the PPI because some of the data also feeds into
a separate price gauge, the personal consumption expenditures price
index, which is closely watched by the inflation-fighters at the
Fed. The central bank aims to bring inflation, as measured by the
PCE index, to 2%.
Friday's release of the wholesale inflation report suggests that
core prices, according to the Fed's preferred inflation gauge, will
rise about 0.3% from September to October when it is reported later
this month, according to economists at Morgan Stanley. On a yearly
basis, core inflation will likely increase to 3.2% from 3.1%, they
estimate.
An acceleration in core inflation, as measured by the PCE, would
intensify concerns at the Fed that more interest rate hikes are
needed to combat rising prices.
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