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Economic Report: Wholesale prices surge again and offer Americans no relief from high inflation

The numbers: Wholesale prices in the U.S. surged again in October and offered little sign that the biggest increase in inflation in decades is going to peter out soon.

The producer price index rose 0.6% last month, the government said Wednesday, matching Wall Street expectations.

The wholesale cost of gas and vegetables both rose sharply to account for a sizable chunk of the increase.

Since January wholesale prices have climbed at least 0.5% in every single month. Before the pandemic they increased an average of 0.1% a month.

Read: Inflation rises at 5.4% yearly pace, CPI shows, and stays at 30-year high

The pace of wholesale inflation over the past 12 months was flat at 8.6%. That’s the highest level since the index was reconfigured in 2009, and likely one of the highest readings since the early 1980s.

Big picture: High inflation is expected to persist well into next year.

Read: Fed still thinks surging U.S. inflation won’t last, but it’s hedging its bets

The U.S. is facing a big shortage of workers and supplies at a time of soaring demand, making it hard for companies to produce enough goods and services to keep up. They are paying more for everything.

The yearly pace of inflation using the Federal Reserve’s preferred PCE price gauge just hit a 30-year high of 4.4%. And the better known consumer price index has jumped 5.4% in the same span. The latest CPI comes out Wednesday.

Senior Fed officials predict inflation will subside in 2022 as the shortages ease, brining inflation back down to around 2.2%. That would be just a hair above the Fed’s 2% target.

Yet Fed officials have persistently gotten their forecasts wrong this year and some critics contend its easy-money policies are helping to stoke the spike in inflation.

Read: Top Fed officials signal interest-rate increases in 2022 are on the table

Key details: The wholesale cost of energy jumped 4.8% in October, mostly reflecting higher gasoline prices.

Americans are paying a lot more to fuel up now than they were a year ago. The average cost of a gallon of gas nationwide is $3.38 compared to $2.20 in November 2020, government figures show.

Food prices fell slightly last month owing to big declines in the wholesale cost of eggs and beef, offsetting a sharp increase in vegetables.

The core rate of wholesale inflation rose 0.4% last month. The increase in the core rate over the past 12 months moved up to 6.2% from 5.9%.

The core rate strips out food, energy and trade margins and is usually gives a more stable picture of inflationary trends.

Inflation pressures in the earlier stages of production didn’t seem to point to much relief, either. The cost of raw and partly finished goods both rose sharply in October.

What they are saying? “No ‘relief’ on inflation yet,” said senior economist Jennifer Lee of BMO Capital Markets

Market reaction: The Dow Jones Industrial Average
DJIA,
+0.29%

and S&P 500
SPX,
+0.09%

were set to open lower in Wednesday trades.

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