Economic Report: U.S. wholesale inflation zooms higher in September

The wholesale cost of gasoline rose sharply in September and consumers paid the price shortly afterward.

The numbers: The producer price index jumped 0.4% in September. That matched the MarketWatch forecast.

Another measure preferred by economists, known as core PPI, rose a smaller 0.2%. The core rate strips out food, energy and trade margins.

The increase in the PPI pushed the 12-month rate of wholesale inflation to 2.6%, the highest level since February of 2012.

What happened: Most of the increase in wholesale prices last month was tied to a runup in gasoline prices after Hurricane Harvey knocked several major oil refineries off line.

Higher margins for retailers, a volatile category that often distorts the PPI report, was another factor.

Wholesale inflation was more subdued if trade, energy and food are stripped out of the equation. Prices of those goods can swing sharply from month to month and exaggerate inflationary trends.

The big picture: The PPI has been an outlier lately. Other measures of inflation that more accurately capture what Americans pay for goods and services are notably lower. The lack of inflation has been so surprising that Federal Reserve Chairwoman Janet Yellen recently called it a “mystery.”

The PPI does show that more inflation is building in the “pipeline” of the economy, but changes in wholesale prices aren’t always passed along to consumers. Right now the PPI shows inflation on the rise, but not at an alarming rate.

Market reaction: The Dow Jones Industrial Average DJIA, +0.18%   and the S&P 500 index SPX, +0.18%   were set to open slightly higher in Thursday trades.

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