A closely watched report that tracks price pressure before it reaches store shelves just flashed a warning that shoppers won't like.
Producer prices climbed 0.3% from September to October, while the annual rate jumped to 6.5%, its highest level since fall 2022, CNN senior reporter Matt Egan said Friday. He pointed to the war with Iran as a major driver.
"We pay attention to this report because it acts like an early warning system," Egan explained. "It really measures pricing pressure that's building up in the system before it hits store shelves."
The monthly figure came in slightly better than economists expected and marked a sharp cooldown from September. But Egan stressed that the bigger picture remains grim.
"What's telling here is that this report, it wasn't as bad as feared, and yet it was still way too hot," he said.
Egan noted the annual rate has nearly doubled in roughly eight months, up from 3.4% in February, "before the Strait of Hormuz became a household name."
He also relayed a stark assessment from Heather Long, his former colleague who now serves as chief economist at Navy Federal Credit Union. Long said business inflation is "smoking hot" right now, according to Egan, and that companies will inevitably pass some of those rising costs along to consumers.
Energy accounts for much of the surge. Egan said home heating oil and diesel prices have more than doubled over the past year, while gasoline has grown dramatically more expensive. Fertilizer is 19% more expensive and airfare 15% pricier, he added, while computers and equipment also climbed significantly, which he called evidence of the AI boom.
Food prices drew particular concern.
"When you zoom in and you look at a monthly basis, food prices, they jumped by 1.3%," Egan warned. "That might not sound like a lot, but that's the biggest monthly increase since the middle of 2022."
Egan tied the numbers directly to the voter anger that shaped this month's elections.
"This is all confirmation of the affordability crisis that was such a major driver in the midterms," he said. "And this report, unfortunately... suggests that there's no relief on the horizon."