‘Diesel prices’ mentioned 21 times in Fed Beige Book as U.S. inflationary pressures spread

[Financial News correspondent Lee Byung-cheol in New York] Inflationary pressures driven by surging diesel prices are spreading across the United States. The labor market remained in a so-called “low-hire, low-fire” state, with both new hiring and layoffs limited. With high inflation and slowing employment occurring at the same time, the Federal Reserve’s interest-rate decisions are expected to become even more difficult.
According to the Beige Book, the Fed’s report on current economic conditions released on the 14th (local time), prices rose sharply in three of the 12 Federal Reserve districts and moderately in eight. In particular, three districts reported that inflationary pressures were intensifying.
References to high diesel prices appeared 21 times in this report, up more than tenfold from the two mentions in the previous report. A survey conducted just before the U.S.-Israeli war against Iran began in late February found no related mentions.
The Dallas Fed said, “Rising diesel prices were the most frequently cited cost-increasing factor,” and that they “are affecting freight transportation, agriculture and airfares, and squeezing profit margins across multiple industries.” Tariffs, raw material prices and rising insurance premiums were also cited as factors adding to businesses’ cost burdens.
The labor market remained stagnant, without large-scale layoffs. In five districts, companies were found to be reducing their workforces by not replacing employees who left or by delaying new hires.
The effects of artificial intelligence (AI) were also evident. A business services firm in the Chicago area said that AI-driven productivity gains had made it possible to reduce staff through attrition. By contrast, a recruiting firm in the Dallas area said it had hired additional staff to review the results of AI interviews.
The housing market slump driven by high interest rates also continued. According to the Mortgage Bankers Association (MBA), the average rate on a 30-year fixed-rate mortgage was 7.5% last week, its highest level in about three years. The New York Fed noted that rising mortgage rates were making existing homeowners increasingly reluctant to move.
Last month, the Fed raised its benchmark interest rate by 0.25 percentage point to an annual range of 3.75%–4.00%. The September consumer price index (CPI), released that day, rose 3.7% from a year earlier, exceeding market expectations. Financial markets priced in about a 37% chance of another rate hike at the Federal Open Market Committee (FOMC) meeting on the 27th and 28th.



[email protected] Lee Byung-cheol, correspondent Reporter