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US producer prices post biggest jump since 2022 as energy costs surge

US producer prices post biggest jump since 2022 as energy costs surge

Rule Changes

Wholesale inflation was 6.3% higher than a year earlier; the Fed held rates October 28, and officials are already pushing for more hikes

October 30th, 2026: Fed officials make the case for at least two more rate hikes

Overview

Updated Nov 1

Wholesale prices jumped 1.3% in September, the biggest monthly gain since March 2022, as gasoline rose 20.3% during the US-Israeli war with Iran. Producer prices were 6.3% higher than a year earlier, the fastest pace since December 2022.

The Federal Reserve held its benchmark interest rate at 3.75% to 4% on October 28, with two of the 12 voting officials preferring an increase. On October 30, Dallas Fed President Lorie Logan and Fed President Alberto Musalem said the central bank will need to raise rates again, and Logan called for at least two more quarter-point increases. The Fed's preferred inflation gauge rose 0.5% in September and was 3.6% higher than a year earlier, up from 3.4% in August.

Why it matters

A December rate increase would keep mortgage and business borrowing costs high into 2027, with energy still setting the pace.

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Key Indicators

1.3%
Producer prices, monthly change
September, the largest rise since March 2022, up from 0.5% in August.
6.3%
Producer prices, year-over-year
Fastest pace since December 2022, up from 5.6% in August.
+20.3%
Gasoline prices, monthly change
Energy prices overall rose 10.8%, accounting for over 80% of the goods increase.
0.5%
PCE prices, monthly change
September, the Fed's preferred inflation measure; energy goods rose 9.2% from August.
3.6%
PCE prices, year-over-year
September, up from 3.4% in August and 3.7% in July.
10-2
FOMC vote to hold rates
October 28 decision keeping the target range at 3.75% to 4%.
3.75%-4%
Federal funds target range
Unchanged since the September increase, the first hike since July 2023.
2
Further quarter-point hikes Logan seeks
Dallas Fed President Lorie Logan, speaking October 30, said the FOMC needs at least two more.
Hike favored
Market view of December
Futures still saw a December increase as more likely than a hold on October 30, though odds eased after the decision.

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People Involved

Jerome Powell
Jerome Powell
Former chair, Federal Reserve (2018-2026)
Left the Fed in May 2026; not involved in the current rate decision
 Chris Zaccarelli
Chris Zaccarelli
Chief investment officer, Northlight Asset Management
Expects a December Fed hike rather than an October one
 Stephen Brown
Stephen Brown
Chief North America economist, Capital Economics
Published a rapid-response analysis of the September PPI release
 Kevin Warsh
Kevin Warsh
Chair, Federal Reserve
Chaired the October 27-28 meeting, where the committee held rates at 3.75% to 4% in a 10-2 vote; investors are watching for signals on December
 Aditya Bhave
Aditya Bhave
Economist, BofA Securities
Argued the Fed could still raise rates at its October 27-28 meeting
 Lorie K. Logan
Lorie K. Logan
President, Federal Reserve Bank of Dallas
Said on October 30 that the Fed needs at least two more quarter-point rate increases
 Alberto Musalem
Alberto Musalem
Federal Reserve president
Indicated on October 30 that the Fed may need to resume raising rates

Organizations Involved

Board of Governors of the Federal Reserve System
Board of Governors of the Federal Reserve System
Central bank
Held rates at 3.75% to 4% on October 28 in a 10-2 vote; officials said two days later that more hikes may be needed

The US central bank, which sets the federal funds rate that anchors borrowing costs nationwide.
U.S. Bureau of Labor Statistics (BLS)
U.S. Bureau of Labor Statistics (BLS)
Federal statistical agency
Published the September PPI report on October 15

The Labor Department agency that compiles the producer price index and the consumer price index.
CME Group
CME Group
Derivatives exchange
Operates the FedWatch tool traders use to price Fed moves

The derivatives exchange whose FedWatch tool estimates the market's implied probability of Federal Reserve rate moves.
Bureau of Economic Analysis (BEA)
Bureau of Economic Analysis (BEA)
Federal Agency
Reported September PCE inflation at 0.5% monthly and 3.6% annual on October 29

The Commerce Department agency that publishes the personal consumption expenditures price index, the inflation measure the Federal Reserve targets.

Timeline

September 2026 October 2026

10 events Latest: October 30th, 2026 · 1 week ago
Tap a bar to jump to that date

  1. Fed officials make the case for at least two more rate hikes

    Latest Policy

    Dallas Fed President Lorie Logan said the FOMC needs at least two more quarter-point increases, calling current price pressures unacceptable. Alberto Musalem and a third official also argued for more tightening.

  2. Fed's preferred inflation gauge rises 0.5% in September

    Data

    The personal consumption expenditures price index was 3.6% higher than a year earlier, up from 3.4% in August. Energy goods rose 9.2% from the prior month.

  3. Fed holds rates at 3.75% to 4% in a 10-2 vote

    Policy

    The FOMC left its target range unchanged at its first meeting since the September hike, with two officials preferring an increase.

  4. FOMC convenes to decide on rates

    Scheduled Policy

    The committee meets October 27-28, its first session since the September hike, with futures traders pricing about a 90% chance of a hold before the statement is released October 28.

  5. October survey shows slower growth but faster price increases

    Data

    S&P Global's flash US Composite PMI slipped to 57.6 from 58.4 in September. Its measure of prices charged rose to 59.8, the highest since August 2022.

  6. Import prices rise 1.1% in September, inflation pressures broaden

    Data

    Import prices rose 1.1% in September, above the 0.8% forecast, boosted by energy and other goods. They are up 8.1% from a year earlier, the largest gain since July 2022.

  7. PPI surges 1.3%, largest monthly jump since March 2022

    Data

    Energy prices rose 10.8%, with gasoline up 20.3%, pushing wholesale inflation to 6.3% year-over-year.

  8. September retail sales beat expectations

    Data

    Retail sales topped forecasts in September, helped by higher gasoline prices, government data released the same morning showed.

  9. September CPI shows core inflation above forecasts

    Data

    Core consumer inflation beat expectations, the first of two consecutive hot inflation reports.

  10. Federal Reserve raises rates for the first time since July 2023

    Policy

    The FOMC hiked the federal funds rate, reversing a multi-year easing cycle as inflation re-accelerated.

Scenarios

1

Fed raises rates at October 27-28 meeting

Deadline passed (Oct 28, 2026)

Discussed by: BofA Securities economist Aditya Bhave, who argued for a hike; futures traders put the odds near 10%

Two consecutive inflation surprises raise the bar for standing still. Bhave says the September inflation reports were strong enough to outweigh earlier downward revisions, and the September hike already broke the easing pattern. Traders have moved the other way, pricing a hold at about 90%.

2

Fed holds in October, raises rates in December

Likely Resolves by End of 2026

Discussed by: Chris Zaccarelli (Northlight Asset Management) and Paul Eitelman (Russell Investments); 73% probability per CME FedWatch

Zaccarelli expects the committee to hold with midterm elections approaching, then deliver a 25-basis-point hike in December. Eitelman calls it a hawkish hold with one more hike at year-end. Traders have moved toward that view: the December odds rose to 73% from 42% a month earlier.

3

Inflation cools and Fed holds through year-end

Unlikely Resolves by End of 2026

Discussed by: Economists noting core goods inflation ex-energy was a milder 0.3%

Energy drove most of the September jump. If oil stabilizes or falls, a ceasefire in the Iran conflict would do that, headline inflation could ease quickly. Core goods excluding energy and the 0.5% rise excluding food, energy, and trade support the view that underlying pressure is contained.

4

Fed raises rates at its December meeting

Likely Resolves by End of 2026

Discussed by: Dallas Fed President Lorie Logan, who called for at least two more quarter-point hikes; futures traders, who still favor an increase

The committee held rates on October 28. Logan said the level of price pressures is unacceptable and that incremental moves are less disruptive than abrupt ones. Futures markets eased back on December odds after the meeting but still saw an increase as more likely than a hold.

Historical Context

2 moments from history that rhyme with this story — and how they unfolded.

October 1973 - March 1974

1973 oil embargo (1973-1974)

OPEC cut oil exports and quadrupled prices during the Yom Kippur War. The shock pushed US inflation from around 6% in 1973 to over 12% in 1974 and helped tip the economy into recession.

Then

Gasoline lines, rationing, and a sharp spike in consumer prices within months.

Now

The energy shock broadened into a decade of stagflation, cementing inflation expectations that took aggressive Fed tightening under Paul Volcker to break.

Why this matters now

A Middle East war-driven energy spike is the pattern today. The question is whether high oil filters into the broader price level the way it did in the 1970s.

2021-2023

2021-2022 inflation surge (2021-2023)

Post-pandemic supply and demand imbalances, amplified by Russia's invasion of Ukraine, pushed headline CPI to a peak of 9.1% in June 2022.

Then

The Fed raised rates from near zero to 5.25-5.5% over 2022-2023, the fastest tightening cycle in decades.

Now

Inflation cooled to near the Fed's 2% target by 2024, and the Fed began cutting rates through 2024 and 2025.

Why this matters now

The Fed's current situation is the reverse image: it hiked in September 2026 after months of cuts driven by the same energy-price channel. The playbook for what comes next is that 2022-2023 cycle.

Sources

(21)
+15
Associated Press DevDiscourse / Reuters Wall Street Journal InvestmentNews Continuum Economics Capital Economics Hurriyet Daily News Investing.com Reuters TheStreet Journal Record / Reuters Market Briefs U.S. Bureau of Labor Statistics Yahoo Finance CNBC Reuters / Sacramento Bee The Hill / FOX59 Associated Press / Chicago Tribune CNN Business Bloomberg Politics Reuters / Investing.com