US freight trucking costs rise 19% — Cyprus Mail

In the United States, freight trucking costs rose by 19% year-on-year in September, the largest increase in more than four years. The sharp rise in diesel fuel prices is affecting the producer price index and could intensify inflationary pressure on consumer prices, Cyprus Mail reports.

Most vehicles in the US freight transport fleet run on diesel fuel. Over the past year, diesel prices have more than doubled, increasing the cost of transporting goods. Carriers may charge more for their services, and these costs could eventually affect prices of goods in stores and the cost of home delivery.

Pressure on the food supply chain

Diesel is also needed in agriculture: it powers tractors and harvesting equipment, as well as trucks that deliver products to stores and restaurants. Although food price growth for end consumers was relatively moderate in September, costs at the early stages of the supply chain were rising faster.

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The average price measure for food resources at the first and second stages of intermediate demand in September was 15.6% higher than a year earlier. It includes producers’ own energy costs and energy expenses embedded in the production of fertilizers and agricultural chemicals. Prices for energy-dependent feed commodities, including corn, hay, hay seed, and oilseeds, rose by more than 25% year-on-year.

Producer costs and prices

The US economy is now less energy-intensive than during the oil crises of the 1970s, but persistently high energy prices affect prices overall. Categories of the producer price index, including materials for manufacturing, are rising at double-digit annual rates. Producers can either reduce margins or pass additional costs on to buyers.

After the data were published, Oxford Economics senior economist Matthew Martin said the company expects food inflation to accelerate later this year. Higher transportation costs were also one of the factors behind the increase in toy prices in September: their prices posted the largest monthly increase on record.