Apollo: Record Diesel Price Surge Poses Greater Inflation Challenge for the Fed

Jin10 Data, September 25 – Torsten Slok, Chief Economist at Apollo Global Management, has warned that the inflation threat posed by record-high diesel prices may exceed the Federal Reserve's current expectations, as fuel costs are being transmitted to the core Consumer Price Index. Slok stated that the impact of diesel-related transportation costs differs from that of gasoline prices. Since transporting goods is critical to economic activity—from retail supply chains to data center construction—demand is highly inelastic, and price increases will ultimately be passed on to businesses and consumers. The impact of rising diesel prices is particularly significant as the Federal Reserve formulates monetary policy following its first rate hike since 2023. Current inflation levels remain significantly above the central bank's 2% target. The so-called core inflation indicator excludes energy factors, but Slok believes the Fed cannot simply dismiss the rise in diesel prices as a temporary phenomenon, as its spillover effects will influence core inflation categories.