US wholesale inflation hits 6% as Iran war sends fuel and freight costs soaring

US wholesale inflation jumped to 6 per cent in April, its highest level since 2022, in the latest sign of how President Donald Trump’s war in Iran has sent the costs of producing and transporting goods surging.

The producer price index was up sharply from a 4 per cent year-on-year gain in March and 3.4 per cent before the war began in February, according to data from the Bureau of Labor Statistics. Economists polled by Bloomberg expected a much softer April reading of 4.8 per cent.

The April figure was the highest since December 2022, when the US economy was reeling from the energy shock triggered by Russia’s full-scale invasion of Ukraine.

Mirroring that period, the latest increase was largely driven by a jump in fuel prices, which have surged since the Middle East conflict erupted in late February. The war’s closure of the Strait of Hormuz, through which a fifth of global oil supply flows, has triggered a sharp rise in crude prices.

US petrol prices have increased by more than half to $4.51 a gallon, while diesel has risen by a similar margin to $5.66, close to record levels.

Higher fuel prices have pushed up costs for US industry. The BLS said the price of freight transportation increased 8.1 per cent in April.

Bradley Saunders, North America economist at Capital Economics, said the rise was “considerably stronger than expected, even given higher oil prices”.

Wholesale prices are often seen as a forerunner of consumer inflation, which has already risen to a three-year high of 3.8 per cent in April.

The 10-year and 30-year Treasury yields — both of which move with inflation expectations — immediately rose on Wednesday to their highest levels since July before quickly erasing those moves.

The 10-year yield climbed to a high of 4.49 per cent, last up 0.01 percentage points to 4.47 per cent. The 30-year yield rose to a high of 5.04 per cent, last up 0.01 percentage points at 5.03 per cent.

The Treasury department will auction $25bn of new 30-year debt later on Wednesday afternoon.