The Balance Today: News You Need To Know on Oct. 12, 2022

Higher Wholesale Prices May Add More Fuel to Fed’s Inflation Fight

Warehouse worker in orange vest checking shipment box
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Inflation was supposed to be coming down, but it might not be. A key inflation measure, the Producer Price Index (PPI) sped up more than expected last month, according to the latest data from the Labor Department. The PPI jumped 0.4% in September after falling 0.2% in August. That’s also a faster rate than the 0.2% increase economists had forecasted. Since last year, wholesale inflation has risen 8.5%, down slightly from 8.7% in August as energy prices eased.

The PPI measures inflation on the wholesale level, meaning prices wholesalers sell to other producers or retailers. When raw material or supplier prices rise for businesses, they often raise their own prices, passing their increased costs on to consumers. That could mean regular shoppers like you and me are going to have to keep paying more for goods when we go to the store. 

This isn’t a great sign for tomorrow, when the Consumer Price Index (CPI) is released and shows how much inflation is hitting goods and services for the rest of us. If CPI shows that inflation isn’t slowing down, it’s likely that the Federal Reserve won’t slow the pace of its aggressive rate hikes in its fight against inflation.

As the Fed raises rates, borrowing for consumers and businesses becomes more expensive. Already, mortgage rates are edging closer to 7%, according to the Mortgage Bankers Association, which said the average rate on a 30-year fixed-rate hit 6.81% in the latest week ended Oct. 7, its highest level since 2006.

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Sources
The Balance uses only high-quality sources, including peer-reviewed studies, to support the facts within our articles. Read our editorial process to learn more about how we fact-check and keep our content accurate, reliable, and trustworthy.
  1. MarketWatch. "U.S. Economic Calendar."

  2. U.S. Bureau of Labor Statistics. "Producer Price Index News Release Summary."

  3. Mortgage Bankers Association. "Mortgage Applications Decrease in Latest MBA Weekly Survey."

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