US wholesale inflation exceeded economists’ expectations in September, reaching its highest rate since December 2022 and adding to evidence of persistent price pressures ahead of the Federal Reserve’s next policy meeting. The Bureau of Labor Statistics’ report on Thursday showed a sharp acceleration in prices among businesses, with increases that could eventually reach consumers. The release followed a stronger-than-expected consumer inflation reading that had already unsettled financial markets.

The Producer Price Index rose 1.3% from the previous month and 6.3% from a year earlier. Those readings were above August’s increases of 0.4% and 5.4%, respectively, and exceeded economists’ forecasts of 0.6% monthly growth and 5.5% annual growth. Released before the stock market opened, the September figures put wholesale inflation alongside consumer prices as a concern for investors assessing whether the central bank will raise interest rates later this month.

The acceleration was evident in both comparisons: prices increased more quickly than in August on a monthly basis, while the annual reading also moved higher. The increases also exceeded economists’ forecasts on both measures. The possible consequences extend beyond businesses, given the potential for price increases to pass through to consumers. That possibility does not establish how much of September’s increase will reach households, or when it might do so.

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The wholesale report arrived after September’s Consumer Price Index also surpassed economists’ expectations on Wednesday. That release increased expectations of a Fed rate rise later this month and prompted sharp equity declines. The Nasdaq Composite fell 1.9%, while the S&P 500 lost 1.1%, their worst sessions since July; the Dow Jones Industrial Average edged lower. Together, the consumer and producer reports left investors weighing stronger inflation readings at the same time as concerns about technology companies’ borrowing were affecting stocks.

Other economic releases on Thursday did little to displace inflation as the central concern. September US retail sales increased 0.8%, twice the expected rise, while weekly jobless claims were slightly below forecasts at 199,000. Bill Adams, chief US economist at Fifth Third Commercial Bank, said in written commentary that neither the consumer nor producer price report showed inflation returning towards the Fed’s target. He also said the retail sales figures were not weak enough to redirect the central bank’s attention away from inflation.

Interest-rate pricing pointed to a distinction between the approaching meeting and December. According to CME FedWatch, traders assigned a 29% probability to a rate increase at the meeting in two weeks. They put the likelihood of an increase of at least a quarter-percentage point at the December meeting at 88%. Those probabilities showed that an immediate move was not the dominant expectation, even as traders placed a much stronger likelihood on a rate increase at the December meeting.

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Stocks nevertheless finished Thursday higher, with the Dow leading as investors shifted away from technology shares. The blue-chip index gained 1.1%, supported by advances in Nike, Salesforce and Home Depot. The S&P 500 rose 0.3%, and the Nasdaq recovered from steep losses to close 0.1% higher. The rebound contrasted with Wednesday’s declines, but the uneven performance across sectors showed that the higher-than-expected inflation figures were not the only consideration shaping trading. Doubts about artificial-intelligence investment remained another source of uncertainty.

Within that trade, concerns centred partly on debt used to finance the AI buildout. Shares in Nvidia-backed CoreWeave recovered from early losses to finish 6% higher after dropping more than 15% on Wednesday amid worries about its borrowing. Dell Technologies and Hewlett Packard Enterprise remained among the S&P 500’s weakest performers for a second consecutive day. Roundhill’s Memory ETF was down about 1.5% after a 5% decline the previous day, while the iShares Semiconductor ETF was roughly 1% lower following Wednesday’s 4.5% fall.

Treasury trading also reflected pressures beyond the inflation outlook. The 10-year Treasury yield was around 5. It had reached 5. The lower yield therefore accompanied, rather than contradicted, a period of heightened inflation concern: demand for safety was also influencing the bond market as investors reassessed technology-related risks.

Attention now turns to the Fed’s meeting in two weeks and a possible rate increase in December. The latest releases leave policymakers facing faster wholesale price growth, a consumer inflation reading above expectations and retail sales that also exceeded forecasts. For businesses and households, the unresolved issue is whether the wholesale increases feed into consumer prices. For markets, the approach to the next policy decision has brought the competing pressures of persistent inflation and uncertainty over AI investment and corporate debt.