US consumers are muscling through higher prices, but for how long?

WASHINGTON (AP) — High gas prices are intensifying inflation and vacuuming up more of Americans’ dollars, yet consumers are still digging deep to spend, powering the economy, at least for now. A slew of economic data Thursday showed that inflation accelerated last month as more expensive oil and gas began to lift prices in other parts of the economy, including shipping and warehousing, before the increases reach most Americans. Wholesale food prices jumped, which could make groceries more expensive in the months ahead.

At the same time, consumers also ramped up their spending, according to data released Thursday. Though much of the increase reflected higher prices, consumer resilience is powering solid U.S. Workers are enjoying an unusual degree of job security despite scattered layoffs, which likely encourages spending despite surveys showing that many Americans have a gloomy economic outlook.

It all adds up to an economy in which people are spending money but don’t feel good about it. “Consumers may have gritted their teeth and looked through higher gas prices,” said Jim Baird, chief investment officer at Plante Moran Financial Advisers. “They’re not happy, but they’re still spending.” Higher costs strain producers, the last stop before they reach consumers A report Thursday on wholesale prices helps explain the gloom: The government’s producer price index, which measures costs before they reach the consumer, jumped 6.3% in September from a year earlier, the biggest increase in nearly four years.

On a monthly basis, prices soared 1.3% from August to September, powered by a 20% rise in gas prices. Higher diesel prices have made shipping more expensive because long-haul trucks and freight trains rely on the fuel. Higher transportation costs may have helped push up food costs, which rose 1.2% from August to September, the biggest monthly gain since February.

The wholesale price report followed the latest consumer price figures, released Wednesday, which showed inflation rising to 3.7% in September, far above the Federal Reserve’s 2% target. “The jolt to transportation prices affects every good in the economy, since inputs to manufacturing move to factories and goods at all stages of production move from producer to wholesaler to retailer by truck, train or rail,” wrote Carl Weinberg, chief economist at High Frequency Economics. economic growth.Workers are enjoying an unusual degree of job security despite scattered layoffs, which likely encourages spending despite surveys showing that many Americans have a gloomy economic outlook.It all adds up to an economy in which people are spending money but don't feel good about it.“Consumers may have gritted their teeth and looked through higher gas prices,” said Jim Baird, chief investment officer at Plante Moran Financial Advisers.