The Japan Times - US producer prices see biggest jump since 2022 in added challenge to Trump

The latest numbers, coming a day after hotter-than-anticipated consumer inflation, underscore the challenges that President Donald Trump faces in cooling prices and winning over cost-weary voters in November's midterm elections.

The Producer Price Index was up 6.3 percent from a year ago last month, according to the Labor Department, significantly above the 5.5 percent expected in a forecast published by MarketWatch.

The acceleration from August was also the biggest year-on-year jump since December 2022, the department said.

On a month-on-month basis, PPI rose by 1.3 percent, the widest advance since March 2022. This was similarly a sharp increase from the 0.5 percent rate in August.

Half of the September uptick for goods costs can be "traced to prices for gasoline, which jumped 20.3 percent," the report said.

"The indexes for diesel fuel, fresh and dry vegetables, jet fuel, residential electric power, and crude petroleum also rose," it added.

A day prior, government data showed that the consumer price index -- a key gauge of inflation -- climbed more than expected to 3.7 percent in September.

While price increases may not lock in a second consecutive interest rate hike this month by the US central bank, the odds of higher rates to tamp down inflation have climbed.

With a second straight day of "higher-than-expected inflation numbers, it seems the Fed will have no choice but to raise rates again this year," said Chris Zaccarelli, chief investment officer of Northlight Asset Management.

- Consumers losing steam? -

Even though US consumer spending appears to be holding up, analysts expect household behavior to reflect the growing pinch from rising costs.

A separate Commerce Department report showed Thursday that retail sales grew by 0.8 percent month-on-month in September to $745.0 billion. This was slower than the 1.3 percent pace in August.

The numbers, adjusted for seasonal changes but not inflation, likely reflect the sharp price hikes in energy costs too.

"That headline figure doesn't tell us much about the health of the consumer, as it was almost entirely driven by a price-related jump in gasoline spending," said Michael Pearce of Oxford Economics.

He expects consumers will lose steam heading into the year-end holiday shopping season, bogged down by higher prices.

Sales continued to rise at restaurants and bars, by 1.1 percent, likely due to spending by higher-income households, Pearce said.

Sales sharply rose at gasoline stations by 6.4 percent.

Excluding gasoline stations, however, retail sales rose a tepid 0.2 percent.

"The moderation in core retail sales, along with a sharp pullback in auto sales, suggests that real consumer spending was likely flat in September," Nationwide chief economist Kathy Bostjancic warned in a note.

Stripping out auto sales and that at gasoline stations, overall retail sales was also just up by 0.2 percent from the prior month.

"The key to sustaining resilient spending will be the health of the labor and equity markets. If the unemployment rate remains low, meaning consumers have a job, they will continue to spend, even if more cautiously," Bostjancic said.

T.Kobayashi--JT