Institutions: Diesel prices hit record highs, posing greater inflation challenges for the Federal Reserve.
51 minutes ago
Apollo Global Management’s chief economist Torsten Slok warns that record diesel prices could pose a larger inflation threat than the U.S. Federal Reserve currently anticipates, as fuel costs are feeding through to the core Consumer Price Index (CPI). Slok notes that diesel-related transportation costs have a different impact from gasoline prices. Given that transporting goods is critical to economic activity—from retail supply chains to data center construction—demand for such services is highly inelastic, meaning price hikes will ultimately be passed on to businesses and consumers. This impact of rising diesel prices is especially pivotal as the Fed sets monetary policy following its first interest rate increase since 2023. Current inflation levels remain well above the central bank’s 2% target. The so-called core inflation metric excludes energy factors, but Slok argues the Fed cannot simply dismiss diesel price rises as temporary, as they will spill over into core inflation categories.
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