Brent crude has surged back above $100 a barrel, capturing investors’ attention. But the more important story for the real economy may be happening further down the supply chain, where diesel prices have climbed to levels that have an even more direct impact on transportation costs, goods prices, and inflation.
Diesel is the fuel that actually moves the economy: trucking, freight, agriculture, shipping, construction. It went from roughly $3.50 a gallon in January to over $6.26 today, surpassing its peak in 2022.
That matters because diesel is a direct, marginal cost embedded in the price of almost everything. When it rises, trucking rates rise, freight surcharges rise, and those costs work their way into food, retail goods, and eventually broad inflation measures — often with a lag, which means the pain from this spring’s spike may still be working through the system.
Sticky transportation costs make it harder for headline inflation to cool as quickly as markets are pricing, which complicates the case for the rate cuts investors have been counting on.
#EyeOnVolatility
