Wholesale inflation jumps 1.3% in September as gas soars: what it means for Florida

Wholesale prices in the United States rose 1.3% in September, the biggest one-month jump since March 2022, as a surge in gasoline and diesel costs rippled through the supply chain, the Bureau of Labor Statistics reported Thursday. For Florida, a state whose economy runs on trucked freight, jet fuel and visitors who drive or fly in, the producer price index offers an early look at cost pressures that businesses may pass along to shoppers, diners and tourists in the months ahead.

Over the past 12 months, the index for final demand climbed 6.3% before seasonal adjustment, up from 5.6% in August and the largest annual increase since December 2022, according to the BLS release. Separately, the Labor Department said first-time applications for unemployment benefits stayed below 200,000 for a fifth straight week, a sign that layoffs remain rare even as inflation heats up.

What the September report showed

The producer price index tracks what businesses receive for goods and services before those costs reach the checkout counter. September's increase followed gains of 0.5% in August and 0.2% in July, the BLS said.

Energy did most of the work. Prices for final demand goods rose 2.6% in a single month, the largest increase since the government began calculating that series in December 2009. Energy prices jumped 10.8%, accounting for more than 80% of the goods increase, and gasoline alone rose 20.3%, about half of the goods advance. Food prices at the wholesale level rose 1.2%, while goods excluding food and energy were up a more modest 0.3%.

Services prices climbed 0.8%. Within services, the index for transportation and warehousing rose 3.4%, and the BLS listed truck transportation of freight and airline passenger services among the categories that moved higher. Margins for trade services, which measure what wholesalers and retailers earn on the goods they sell, rose 1.4%.

A narrower measure that strips out food, energy and trade services rose 0.5% in September after 0.3% in August, and was up 5.0% over the year, the release said. The Associated Press, using a separate core gauge that excludes only food and energy, reported a 0.7% monthly gain and a 5% annual increase.

The key figures from the release are below.

Pressure building further up the pipeline

The figures for earlier stages of production point to more cost pressure ahead. Prices for processed goods used as inputs by other businesses rose 2.5% in September and 14.1% over the year, according to the BLS. Diesel fuel in that category climbed 21.0% for the month. Unprocessed goods rose 8.4%, led by a 28.3% jump in crude petroleum.

Not everything went up. Wholesale egg prices fell 39.7%, and retail margins for automotive fuels and lubricants dropped 30.3%, a sign that gas station operators absorbed part of the spike in wholesale gasoline costs rather than passing all of it to drivers right away.

The wholesale report arrives one day after the consumer price index showed annual inflation reaching 3.7% in September, driven by a 9.1% jump in gasoline, a report The Florida Press covered Wednesday. Together, the two releases add to pressure on the Federal Reserve to raise its benchmark interest rate, the AP reported, noting that inflation has stayed above the central bank's 2% target for five and a half years.

What it means at Florida pumps and loading docks

Florida drivers felt September's fuel surge directly. Statewide diesel hit a record $6.35 a gallon on Sept. 18, according to AAA figures reported by News4JAX. By Oct. 5, AAA put Florida's average diesel price at $5.81 and regular gasoline at $4.06, after a drop of nearly 30 cents in a week as crude oil prices eased. Even after that pullback, regular gas in the Jacksonville area cost about a dollar more per gallon than a year earlier, when it averaged $3.03.

Diesel is the fuel that moves Florida's goods. Much of what lands on grocery shelves, at construction sites and in restaurant kitchens across the peninsula arrives by truck, and the BLS reported that prices for truck transportation of freight rose in September. Higher hauling costs tend to show up later in the price of food, building materials and other everyday goods, which is why economists watch the producer index as a leading signal for consumer prices.

Florida's tourism industry faces a similar squeeze. Jet fuel and airline passenger services both rose in the September report. Airfares are tied closely to fuel costs, and the state's attractions, cruise lines and rental car fleets head into the busy winter season paying far more for fuel than they did a year ago.

The retreat in pump prices in early October suggests some of the September spike may unwind. AAA attributed the decline to easing crude oil prices and the usual drop in fall driving demand, according to News4JAX. Whether wholesale prices follow will not be clear until the October producer price report, which the BLS has scheduled for Nov. 13.

Jobless claims stay low

The labor market, so far, is holding up. Initial claims for unemployment benefits rose by 1,000 to a seasonally adjusted 199,000 in the week ended Oct. 10, the Labor Department said Thursday. The prior week was revised up to 198,000. Economists polled by Reuters had expected 200,000, according to its report. It was the fifth consecutive week that claims stayed under the 200,000 mark, a run economists have described as a low-hire, low-fire job market.

The four-week moving average, which smooths out weekly swings, edged up 250 to 198,500. Continuing claims, a rough gauge of how hard it is for laid-off workers to find new jobs, fell by 4,000 to 1.710 million in the week ended Oct. 3. The Associated Press reported that layoffs remain historically low and most workers continue to enjoy job security.

Where Florida's job market stands

Florida's unemployment rate was 4.5% in August, seasonally adjusted, according to the Florida Department of Commerce figures reported by the News Service of Florida. That was down from 4.6% in July and marked the third straight monthly decline of a tenth of a point after nearly a year of increases. About 502,000 Floridians were out of work in a labor force of roughly 11.1 million, the News Service reported.

The state's rate remains above the national figure, which was 4.1% in August. Florida added 21,800 jobs that month, according to The Center Square, and roughly 59,000 over the year. Miami-Dade County had the lowest unadjusted local rate in the state at 2.7%.

Low layoffs offer a cushion for Florida households facing higher fuel and grocery bills, but they also give the Fed less reason to hold off on rate increases. Higher rates would ripple through the state's housing and insurance markets, where Floridians already face some of the steepest mortgage, home insurance and condo costs in the country.

What's next

Florida's September jobs and unemployment figures are expected from the state later this month. The BLS will publish October producer prices on Nov. 13, and the Federal Reserve's next policy decision will be weighed against both inflation reports from this week. For Florida businesses that buy diesel by the tanker load and price their services months in advance, the direction of oil prices over the next few weeks will matter as much as any single report.