Wholesale Inflation Jumps 1.3%, Loaf Index Panics

Wholesale inflation, the prices merchants pay each other before anything reaches your shelf, jumped 1.3% in September, the Royal Bureau of Labor Tallies reported Thursday. That is the fastest monthly climb since March 2022. The clerks of the counting houses had guessed 0.5%. (I have checked this four times. The number did not get smaller.)

Over twelve months, wholesale prices are up 6.3%, the highest yearly pace since December 2022. The culprit is the usual one. Lamp oil and other fuels drove about 80% of a 2.9% leap in the price of goods, the biggest monthly fuel-driven jump in the Bureau's records, which run back to 2009. The Hormoth Narrows are still shut while Calimshan and the realm carry on their seven-month war, and everything that moves, bakes or glows pays for it.

Now the part that made me put down my quill. Strip out food and energy and wholesale prices still rose 0.7% in the month, and 5% over the year, the highest since January 2023. That matters because it means lamp oil is no longer the only thing getting dearer. Merchants are passing costs along to other merchants. Yesterday I explained that shop prices were up 3.7%. Wholesale is the pipe that feeds shop prices, and the pipe is running hotter than the tap.

On the Loaf Index, one honest loaf is still 6 copper. A 6.3% wholesale rise would add roughly 0.38 copper to it, if the baker passed the whole thing on. Bakers rarely pass on the whole thing at once. They swallow it for a while, and then one morning the loaf is 7 copper and nobody can say exactly when it happened.

Meanwhile, the Ministry of Merchant Affairs says shoppers spent 0.8% more in September than in August, slower than August's 1.3%. With prices rising 0.6% in the same month, much of that is simply the same loaves at higher prices. Folk are not buying more. They are paying more, which is a different thing entirely.

Reserve Governor Kristoff Wallop has already said more hikes are needed, and a number like this does not help the doves. Wholesale prices feed into the Reserve's favorite gauge of spending prices, so the Federal Reserve of Waterdeep will be reading this report closely. My aunt Marigold, who keeps her savings in a boot, called to say a boot is not affected by wholesale prices. I reminded her that boots are leather, and leather is shipped by wagon, and wagons run on oil. She hung up.

What this means for your pantry: wholesale prices usually reach the shelf within a few months, so buy flour, salt and candles now, while the old prices are still on the shelf.

— B.T. (Loaf Index: see sidebar)