Wholesale Prices Climb 6.3% Annually, Biggest Jump Since 2022

Wholesale prices rose 1.3% in September and 6.3% over the prior 12 months, the Bureau of Labor Statistics said Thursday, in a producer price index report that came in well above what economists had predicted. It was the steepest monthly gain since March 2022 and the largest annual reading since December 2022, according to Cnbc.

Dow Jones-polled economists had forecast a 0.6% monthly advance and 5.5% annually. Energy drove a large share of the overshoot as the U.S. war with Iran restricted oil supply and pushed fuel costs higher, Cnbc reported. Core PPI, which strips out food and energy, rose 0.7% on the month and 5% over the year.

Also read: Fed Minutes Show Most Officials Favor Another Rate Hike by Year End

Key facts

• September PPI: up 1.3% for the month and 6.3% on an annual basis, versus economist forecasts of 0.6% and 5.5%.
• Core PPI, excluding food and energy, rose 0.7% in September and 5% over 12 months.
• The BLS said roughly half of September’s increase in processed goods for immediate demand was tied to higher diesel fuel prices.
• September retail sales rose 0.8%, above the 0.4% economists expected, but slower than the more than 1% gain a month earlier.
• Separately, Netflix said it will cut about 6% of its workforce, or roughly 1,000 employees, with the bulk in product, tech, legal and human-resources teams, Theguardian reported.

Inflation pressure reaches consumers and companies

The PPI release followed Wednesday’s consumer price index, which showed prices up 0.6% from August to September and 3.7% over 12 months. Economists had forecast 0.6% and 3.6%. Core CPI rose 0.3% monthly and 2.6% annually, versus expectations of 0.2% and 2.5%.

Wednesday’s Beige Book, the Federal Reserve’s survey of economic activity, logged the highest number of inflation-related mentions on record, according to an analysis by Bespoke Investment Group. Retail sales excluding autos and gas stations rose 0.25% from August to September, down from roughly 1.1% in the prior period, a sign that fuel costs are prompting consumers to cut back elsewhere. These reports offered some of the last inflation readings before the midterm election, which will determine how much power each party holds in Washington.

Also read: US adds just 29,000 jobs in September as unemployment hits 4.2%

Netflix cuts about 1,000 roles

Netflix is laying off about 1,000 people, its largest reduction since 2022, Theguardian reported. Co-CEOs Greg Peters and Ted Sarandos told staff in a memo that the mission to entertain the world requires discipline about where the company prioritizes people and resources, and said the business is strong and remains on track for its full-year forecast.

Netflix shares, down about 25% this year, rose 0.7% on Wednesday. The company had about 16,000 employees at the end of last year. Earlier this year its pursuit of Warner Bros Discovery’s streaming and studio assets failed, and Paramount completed its $110bn acquisition of Warner Bros this month. eMarketer senior analyst Ross Benes said Netflix has been unable to find another major revenue line and remains reliant on subscriptions that may be nearing a ceiling. The company has invested in an ad tier, live programming and gaming.

Why it matters

Rising wholesale costs feed through to what households and businesses pay, and the September figures reinforce a run of hotter-than-expected inflation data. That shifts the odds for monetary policy: about 90% of futures traders expect at least one Fed hike by the end of the year. Netflix’s cuts show even the largest streaming platform faces pressure as free, user-generated content draws viewers away. Note that rate expectations and equity moves are speculative; this article is not financial advice and markets are volatile.

What to watch

The Federal Reserve meets on Oct. 28, when traders currently price a nearly 34% chance of a rate increase, up from under 18% a week earlier. Chris Zaccarelli, investing chief at Northlight Asset Management, said two straight days of higher-than-expected inflation numbers leave the Fed with little choice but to raise rates again this year.

Written by

Benjamin

Benjamin Carter covers business, finance, and the stock market for StockPil, focusing on the trends and data that matter to everyday investors.

Sources: CNBC, Theguardian