Wholesale Prices Up 6.5% Over the Past Year, Putting the Squeeze on Working Families Heading into Holiday Season

Wholesale Prices Up 6.5% Over the Past Year, Putting the Squeeze on Working Families Heading into Holiday Season

Wholesale inflation has topped 4% for eight straight months, with continued price hikes on the horizon

Today’s Producer Price Index (PPI) report shows wholesale prices rose 0.3% in October and 6.5% over the past year, the largest annual increase since November 2022. This marks the eighth consecutive month of wholesale inflation above 4%, the longest stretch since 2023. Core producer prices, excluding food, energy, and trade services, increased 0.5% in October and are up 4.9% over the past year.

Increased operating costs for fuel, freight, and materials due to the oil price spike in October are still making their way to store shelves. Tuesday’s Consumer Price Index (CPI) report showed that prices are rising faster than expected and price increases have spread far beyond the pump: grocery prices rose at their fastest pace in five months, and shelter inflation accounted for 30% of October’s increase. There are more price hikes ahead: a net 37% of small businesses plan to raise prices in the next three months, the highest share since July 2022. This is happening at a time when 57% of consumers already say their living standards have been eroded by high prices. Persistent wholesale inflation threatens to keep consumer prices elevated well into the holiday season and the new year.

Groundwork’s Chief Economist Breyon Williams, released the following statement:

“Trump’s policies are driving up prices for consumers on everything from gas to groceries. Between a war that is pushing up wholesale energy prices and tariffs that have made crucial manufacturing inputs more expensive, working families are paying the price for the president’s reckless economic agenda. As Americans begin their holiday shopping, they should prepare for sticker shock thanks to the Trump administration.”

BACKGROUND

Trump’s war continues to raise energy and shipping costs.

• Trump’s war with Iran is still making it more expensive to produce and ship goods. Wholesale energy prices are up 37% over the past year. Wholesale diesel prices are up 115% from a year ago.
  • Brent crude oil averaged $124 per barrel in October, up $10 from September and the highest level since July 2022 once adjusted for inflation. Despite some recent ease in its price, Brent crude oil is expected to average about $100 per barrel through December.
• High diesel prices are keeping transportation costs elevated. Diesel prices remain elevated at $6.06 per gallon, up 61% from a year ago.
  • Truck freight prices rose 3.9% in October and are up 24.6% over the past year, following a 19.3% annual increase in September.
  • In a recent earnings call, the CEO of Karat Packaging, a disposable food packaging manufacturer, pointed to shipping and input costs as reasons for Karat’s company-wide price hikes. He explained, “once we began [to] realize this war is not ending, we finally announced a price increase and fuel surcharge.”
  • Higher gas and diesel prices are putting pressure on grocery prices, according to Kroger CEO Greg Foran. In a recent earnings call, he said “with gas prices, diesel prices… when you get an environment like this, you see it start to flow through.”

Trump’s tariffs are keeping the cost of materials high, threatening further price increases for consumers.

• Wholesale prices for goods excluding food and energy are up 5.2% from a year ago. Tariff-exposed inputs have become more expensive in the past year, including aluminum mill shapes, used for building and manufacturing, up 23.3%; industrial chemicals, up 17.1%; and plastic resins, used to make plastic products, up 9.5%.
• Manufacturers are bracing for the impacts of Trump’s economy in 2027. One respondent to ISM’s October manufacturing survey said, “As we plan next year’s budget, it’s sobering to roll up the annualized impact of (1) remaining tariffs, (2) AI-impacted commodity price increases and (3) price increases related to geopolitically influenced commodities.”