Wholesale inflation reaccelerated in August, and the fuel that drives American freight was most of the reason.
The Producer Price Index for final demand rose 0.4% last month on a seasonally adjusted basis, the Bureau of Labor Statistics reported Thursday, matching the Dow Jones consensus and marking the largest monthly gain in three months. The unadjusted 12-month rate reached 5.4%, a tenth above the 5.3% forecast and more than two and a half times the Federal Reserve's 2% target. July's increase was revised down to 0.1%.
Almost all of it was energy. Final demand goods prices advanced 1.1% while services rose just 0.1%. More than three-quarters of the goods increase traced back to energy, which jumped 4.2% on the month. Over a third of the goods gain came from a single line item: diesel fuel, up 24.1% in August.
The Core Reading Tells a Different Story
Strip out food and energy and the picture softens considerably. Core PPI rose 0.2% for the month, undershooting the 0.3% consensus, and held at 4.6% year over year, in line with expectations.
That split is the argument the Fed will be having next week. Policymakers can point to the core number and say the underlying trend is contained, or point to 5.4% headline and say inflation expectations are at risk regardless of what is driving them. Both readings came from the same release.
Markets took the hawkish side. The probability of a 25-basis-point increase at the September 15–16 FOMC meeting rose from roughly 65% to about 70% after the data, according to CME Group federal funds futures — up sharply from the coin-flip pricing that followed Chair Kevin Warsh's Jackson Hole speech in late August. Three regional Fed presidents already dissented in favor of a hike at the July 28–29 meeting.
Yields Up, Stocks Down, Gold Off
The 10-year Treasury yield rose eight basis points to 4.91%, its highest level since 2023. Equities gave ground for a third straight session: the S&P 500 fell 50.90 points, or 0.67%, to 7,585.46; the Dow Jones Industrial Average lost 312.29 points, or 0.60%, to 52,068.37; and the Nasdaq Composite dropped 201.35 points, or 0.77%, to 26,051.99. The Russell 2000 slipped 0.71% to 2,900.52.
Crude kept climbing. Brent traded above $100 a barrel for a second day on continued U.S.–Iran tensions and attacks on shipping near the Strait of Hormuz, with West Texas Intermediate up more than 3% near $99. Gold fell $52.20, or 1.17%, to $4,408.50 an ounce as higher real yields weighed on the metal.
Separately, initial jobless claims came in at 206,000 for the week, against 205,000 expected and a revised 207,000 the prior week. Continuing claims were 1.774 million. The labor market is not giving the Fed a reason to hold.
Friday Decides It
August CPI lands at 8:30 a.m. Eastern on Friday, September 11 — the last inflation print before the FOMC convenes. Consensus is 3.4% headline year over year, with core CPI expected around 0.2% monthly and 2.4% annually.
With diesel up 24% at the wholesale level and crude above $100, the risk to Friday's headline number sits on the upside.
Sources: U.S. Bureau of Labor Statistics (PPI news release, August 2026), CNBC, Yahoo Finance, Washington Examiner, Crypto Briefing, Trading Economics, FXStreet, CME Group FedWatch