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US wholesale inflation surged last month, with producer prices rising 6% from a year earlier—the most since December 2022—as the 10-week Iran war pushed up energy prices and increased pressure on companies to pass higher costs to consumers.
The Labor Department reported Wednesday that its producer price index, which tracks inflation before it reaches consumers, jumped 1.4% in April, the biggest monthly gain since March 2022.
Energy prices climbed 7.8% from March to April and rose 22.7% from a year earlier. Gasoline increased 15.6% from March, while diesel—the dominant fuel used in shipping—rose 12.6%.
On a monthly basis, the producer price index rose 1.4% in April. On a year-over-year basis, producer prices increased 6%, the largest since December 2022.
Excluding volatile food and energy costs, core producer prices rose 1% from March and 5.2% from April 2025.
Gasoline prices rose again to a national average of $4.51 per gallon overnight, according to motor club AAA, adding to pressure on household budgets.
The report also showed a sharp increase in transportation costs. The wholesale cost of truck transportation of freight rose more than 8% from March, and air freight increased 3.6% for the month.
Oxford Economics’ Grace Zwemmer said diesel fuel is crucial for food prices because it powers farm equipment and supports commercial shipping and trucking. She noted that food prices rose 0.2% in April, after a 0.6% decline in March, and suggested higher fuel prices could create upward pressure if the war persists.
Wholesale prices are often viewed as an early indicator of where consumer inflation may be headed. Economists also track components that feed into the Federal Reserve’s preferred inflation gauge, the Commerce Department’s personal consumption expenditures (PCE) price index.
All figures in the report came in well above economists’ expectations, shifting the outlook for the Federal Reserve’s inflation fight.
“This report will set off alarm bells at the Fed and add fuel to the political conversation about affordability,” Carl Weinberg, chief economist at High Frequency Economics, wrote in a commentary. “The results are so far above expectations that this update will set off alarm bells in the financial markets, too.”
The producer price surge comes as Americans are already frustrated by the high cost of living. Affordability is expected to be a key issue ahead of the Nov. 3 elections determining whether President Trump’s Republican Party maintains control of the Senate and House of Representatives.
Earlier this week, the Labor Department said the consumer price index rose 3.8% last month from April 2025, the biggest year-over-year increase in more than three years, as energy prices continued to climb.
Rising costs may intensify pressure on companies to raise prices. Walmart, known for focusing on low prices, announced rare price hikes last year, and the report suggests the pressure could increase.
Whirlpool, which makes KitchenAid and Maytag appliances, reported that revenue fell nearly 10% in its most recent quarter and said the war has caused a “recession-level industry decline” that has undermined consumer confidence. The company said it announced a 10% price hike in April and expects an additional 4% increase in July.
The cost of credit, which had been declining, has been frozen in place.
Before the Iran war, the Fed was expected to cut its benchmark interest rate in 2026. The outlook has become more cautious as policymakers wait to see how long the conflict lasts and whether higher energy prices spread into other goods and contribute to broader inflation.
Trump has criticized the Fed and outgoing chair Jerome Powell for not cutting rates to support the economy. Kevin Warsh, the president’s hand-picked choice to succeed Powell, is expected to be confirmed by the Senate this week, though it remains unclear whether he would pursue lower rates given the uncertainty tied to the war.
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