The fuel shock now compounds in business input costs, not just the pump.
With order books and backlogs at multi-year highs in both manufacturing and services, firms are absorbing war-driven fuel and tariff costs and passing them through — prices-paid gauges at 77.9 and 74.0 lock inflation above target into 2027 even as hiring cools.
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The record PPI surge is the fuel shock compounding at the producer gate, with widening trade-service margins marking the pass-through into consumer prices the theme predicts.
Factories with rising orders and backlogs are strong enough to absorb and pass through the diesel and tariff shock at the gate, compounding the fuel shock into pipeline costs.
Services firms with multi-year-high order backlogs are absorbing war-driven fuel costs and passing them through, with prices-paid at a four-year high of 74.0 locking inflation above target.