Wholesale Inflation Surge Triggers Federal Reserve Interest Rate Pressure

Small businesses must now decide whether to absorb rising oil prices or pass those costs to their customers. The Small-Business Optimism Index fell to 95.8, its lowest print since April of last year. This pressure stems from a 4% year-over-year increase in the Producer Price Index for final demand in March 2025, the highest level since February 2023. Diesel fuel prices gained 42% in March, while energy prices overall surged 8.5% from February. These costs were driven by the war in Iran and the shutdown of the Strait of Hormuz. Federal Reserve policymakers are now inclined to raise interest rates.