VIX stock was hit by a 6.3% jump in producer prices in September, the biggest annual increase in nearly four years. Gas prices rose 20% and pushed higher transportation and food costs into the wholesale pipeline.
That leaves businesses facing faster input-cost pressure while consumers keep spending through it. Jim Baird of Plante Moran Financial Advisors said consumers may have gritted their teeth and looked through higher gas prices.
Gas prices lift September costs
1.3% was the month-over-month rise in the producer price index from August to September, and gas did most of the work. Wholesale food prices also rose 1.2% over the same period, showing the increase was not limited to one fuel line.
20% was the year-over-year increase in gas prices, and that move fed directly into shipping, warehousing, and food. Carl Weinberg of High Frequency Economics said, "The jolt to transportation prices affects every good in the economy, since inputs to manufacturing move to factories and goods at all stages of production move from producer to wholesaler to retailer by truck, train or rail".
Retail sales keep moving
0.8% was the rise in retail sales from August, even as inflation pressures intensified. Spending at gas stations increased 6.4%, and restaurants and bars posted a 1.1% gain, while retail sales excluding gas still rose 0.2% last month.
3.7% was the consumer price index reading for September, so wholesale and household price pressure moved up together. Jim Baird said, "They’re not happy, but they’re still spending."
Federal Reserve watches 200,000
200,000 was the threshold that weekly unemployment claims stayed below last week, keeping job security unusually firm by recent standards. That combination of low layoffs and still-solid spending helps explain why higher prices have not yet shut down demand, even as diesel averaged $6.32 a gallon on Thursday, up from $3.66 a gallon a year ago.
If unemployment stays low and gas prices keep feeding through transportation costs, the next question is how long households can keep absorbing food and shipping inflation without pulling back.
