US wholesale prices rise in latest sign of stubborn inflation as oil
prices continue to climb
[September 11, 2026] By
CHRISTOPHER RUGABER
WASHINGTON (AP) — Wholesale inflation picked up last month after cooling
earlier this summer as higher oil and gas prices stemming from the Iran
war keep costs elevated.
The Labor Department’s producer price index — which captures inflation
before it reaches consumers — rose 5.4% in August from a year ago, up
from 4.8% in July, the government said Thursday. Annual wholesale
inflation peaked this year at 5.9% in May after the Iran conflict raised
energy costs. On a monthly basis, wholesale prices increased 0.4% from
July to August, after a 0.1% increase the previous month.
Inflation has shown some signs of easing in recent months but is still
high, frustrating consumers who are struggling with more expensive gas,
groceries, clothing and other essentials. U.S. oil prices topped $100 a
barrel Thursday on renewed fighting in the Middle East, while President
Donald Trump has intensified a trade war with Canada, a sign tariffs
still could push up costs. Rising prices pose a political problem for
the Trump administration and Republicans running in the midterm
elections.
In a striking acknowledgment Wednesday, Trump said that oil prices
likely won’t come down until after U.S. midterm elections, but added
that prices will fall immediately after Nov. 3.
“Right after the election, oil prices are going to be tumbling
downward,” Trump said. “I think it’s going to take a little bit longer
than the midterm.”
The cost for a regular gallon of gasoline has soared 44% since the U.S.
and Israel attacked Iran in late February, according to data from the
AAA. Diesel, which is used in manufacturing, shipping and
transportation, and can have an outsized role in producer and consumer
prices, has rocketed 59% higher in that same time frame.
Excluding the volatile food and energy categories, core prices rose 0.2%
from July to August, the same as the previous month. Compared with a
year ago, core prices rose 4.6%, up from 4.2% in July.
Energy prices were a big driver of last month's increase as fighting in
the Middle East flared. The wholesale price of diesel soared 24.1% just
from July to August. It has risen nearly 78% from a year earlier. Diesel
fuel is used in large cargo trucks for shipping goods all over the
country, and could make groceries, clothes and other items more
expensive. Shipping prices rose 2.3% just last month.
Other items that jumped in price include airfares, hospital care, and
electronic components, which have been lifted by rampant spending on AI
data centers. Food prices ticked up just 0.1% last month, a potential
signal that grocery costs could cool. Electric utility prices declined,
too.
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 Thursday's figures will come under
particularly close scrutiny because they could help determine
whether the Federal Reserve raises its short-term interest rate at a
policy meeting next week. Data from the producer price index helps
calculate the Fed's preferred inflation measure, which will be
released Sept. 30.
Airfares, hospital care and physician services all
grew more expensive last month, with airfares jumping 4.2%. Those
measures are all included in the Fed's preferred gauge and their
increases could make a rate hike more likely.
With wholesale inflation “still looking relatively hot, the Fed
seems likely to hike this year even if it doesn’t pull the trigger
this month,” wrote Stephen Brown, chief North America economist for
Capital Economics.
Even more important is Friday’s consumer price index report, the
government’s highest-profile inflation release. Figures from that
report are also used to compile the Fed’s preferred measure of
costs. Economists believe that report could show core prices cooled
in August. Some Fed officials have said that if Friday’s CPI is
high, they would lean toward a rate hike at the central bank’s
meeting next week. But if it comes in relatively low — as it did in
June and July — they would support keeping rates on hold.
The Fed’s main goals are supporting maximum employment and combating
inflation by keeping prices stable. It raises borrowing costs to
cool spending and slow inflation.
Fed chair Kevin Warsh said in a high-profile speech late last month
that the central bank needs to be “confident that underlying
inflation is moving” to its 2% objective. “Otherwise, we have work
to do,” comments that have led many economists to expect a rate hike
next week.
Yet last Thursday, Fed governor Christopher Waller, echoing some
other Fed officials, suggested that if Friday’s inflation report
shows price increases cooling, then he would support keeping rates
where they are. Waller is one of the 12 officials who vote on each
Fed rate decision.
Another key concern for the Fed is whether inflation is driven
mostly by one-time factors such as more expensive oil and gas, or if
higher prices are spreading more broadly through the economy. Warsh
noted in his remarks two weeks ago that more than half the 199
categories of goods and services the government tracks have recorded
price increases of at least 3% compared with a year ago, an
unusually high number.
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