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PPI Cools to 0.3% as Oil Falls Below $90: Is Inflation Relief Coming for Mortgage Rates?

Wholesale inflation cooled to 0.3% in October while CPI ran hot at 0.4%. We chart oil, PPI and CPI over three years, explain which number moves mortgage rates, and link today's Opening Bell show.
Inflation COOLED...So Why Didn't Mortgage Rates Drop? Watch today's Opening Bell
OCT PPI+0.3%OCT CPI+0.4%CORE CPI+0.3%WTI OIL$88.74BRENT$95.8210-YR UST5.13%30-YR (FREDDIE)7.11%DEC HIKEPriced inOCT PPI+0.3%OCT CPI+0.4%CORE CPI+0.3%WTI OIL$88.74BRENT$95.8210-YR UST5.13%30-YR (FREDDIE)7.11%DEC HIKEPriced in
Daily Mortgage Update · Friday, Nov. 13, 2026

Wholesale prices are the last inflation check before the Fed's December meeting. After a hot CPI and Fed Governor Waller's half-point warning pushed mortgage rates up this week, we charted oil, PPI and CPI over the past three years to answer one question: is the market missing the drop in oil?

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DF
By Dan Frio, Mortgage Advisor · NMLS #246527 · 38 years in mortgage lending
Published Nov. 13, 2026, 7:15 a.m. CT · Updated 7:35 a.m. CT with PPI results · 7-min read

The 60-second version

  • PPI today: October producer prices rose 0.3%, cooler than the 0.4% forecast, with core PPI up 0.3% as expected. September was revised up to +1.4% (core +0.8%).
  • This week: CPI rose 0.4% (core +0.3%) and Fed Governor Waller said a 50-basis-point hike should be considered. Mortgage rates jumped.
  • Rates: The 10-year Treasury is at 5.13% after the report; Freddie Mac's 30-year average is 7.11%.
  • Oil: WTI settled at $88.74 Thursday, well below the $102 May average, though Middle East headlines are still pushing it around.
  • The correlation: Over three years, the change in oil prices lined up with CPI inflation at +0.88, and oil tends to show up in CPI about a month later.
  • The catch: Oil is still close to 50% above a year ago, so yearly inflation numbers stay high until spring. Relief shows up first in the monthly numbers.

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1. Today's PPI: wholesale inflation at this stage of the cycle

The Producer Price Index measures what businesses receive for goods and services, inflation before it reaches the store shelf. September's PPI jumped 1.3% (revised today to 1.4%), the biggest monthly increase since March 2022, after energy prices for producers surged 10.8%.

PPI REPORT, 8:30 a.m. ET: Producer prices rose 0.3% in October, a tenth below the 0.4% forecast and far cooler than September's (revised) 1.4% jump. Core PPI rose 0.3%, right on forecast, after a revised 0.8%. Market reaction: the 2-year Treasury, which tracks Fed expectations, slipped about 2 basis points to 4.85%, a sign the softer number takes some air out of half-point hike talk. But the 10-year, which drives mortgage rates, is up about 3 basis points to 5.13% (8:31 a.m. ET), extending Thursday's jump to 5.10%. Bottom line: wholesale inflation cooled as oil eased, but long-term rates are not falling yet.
Oct. PPI (m/m)
+0.3%
vs +0.4% expected
Oct. core PPI
+0.3%
vs +0.3% expected
Sept. PPI (revised)
+1.4%
core +0.8%
Market reaction
5.13%
10-yr, 8:31 a.m. ET (+0.03)

PPI month over month in 2026

Final demand, seasonally adjusted, % change from prior month. Source: BLS via FRED (PPIFIS); October actual.
-0.4%0.0%0.4%0.8%1.2%1.6%+0.6%Jan+0.5%Feb+0.8%Mar+1.1%Apr+0.5%May-0.1%Jun+0.1%Jul+0.5%Aug+1.4%Sep+0.3%Oct

2. The week that pushed mortgage rates back up

On Tuesday, CPI rose 0.4% in October against a 0.3% forecast, and core CPI rose 0.3% for the third month in a row. Hours earlier, Fed Governor Christopher Waller said that if core inflation came in around 0.3% or higher, a 50-basis-point hike should be considered at the December meeting. Core came in at exactly 0.3%.

That one-two punch sent the 10-year Treasury to about 5% Tuesday, and when bonds reopened Thursday it climbed to 5.10%. The 2-year jumped the 2-year up about 18 basis points, its biggest one-day jump since April 2025. Mortgage News Daily's 30-year index jumped 0.12 to 7.30%. Freddie Mac's weekly survey, which covers the whole week, still slipped to 7.11% from 7.18% Thursday because rates were lower earlier in the week.

Tue · CPI+0.4% headline, +0.3% core (third straight) HOT
Tue · Waller50-bp hike "should be considered" if core stays near 0.3% HAWKISH
Thu · ClaimsInitial 200,000 (est. 195,000); continuing 1.697M, lowest since April 2023 STRONG
Thu · Home salesExisting home sales fell 5.5% to 3.75 million, the lowest since August 2010 WEAK
Thu · Freddie Mac30-year fixed 7.11%, down from 7.18% SURVEY
Fri · PPIOctober producer prices, 8:30 a.m. ET TODAY

3. Oil, PPI and CPI: the last three years

Here's oil (gold) against PPI (red) and CPI (navy) inflation since October 2023. Look at the shaded area: when the Iran war sent oil from about $64 in February to over $100 by April and May, PPI inflation almost doubled and CPI inflation jumped from about 2.4% to 4.2%.

Oil price vs. PPI and CPI inflation, Oct. 2023 – Sept. 2026

Monthly. Oil = WTI monthly average. PPI = final demand, % change from a year earlier. CPI = % change from a year earlier (Oct. 2025 interpolated, shutdown). Sources: FRED (MCOILWTICO, PPIFIS, CPIAUCSL); WTI Nov. 12 settle via Newsquawk.
$50$60$70$80$90$100$1100%1%2%3%4%5%6%7%Iran war oil spikeWTI now ~$88.7Oct '23Apr '24Oct '24Apr '25Oct '25Apr '26Sep '26WTI oil, $/barrel (left)PPI, % vs year ago (right)CPI, % vs year ago (right)

Oil's yearly change vs. CPI inflation

The two lines move almost together: oil's year-over-year change (left) and CPI's year-over-year change (right). Sources: FRED.
-40%-20%+0%+20%+40%+60%+80%0%1%2%3%4%5%6%7%Oct '23Apr '24Oct '24Apr '25Oct '25Apr '26Oil price, % change vs year ago (left)CPI inflation, % vs year ago (right)

4. Is there a correlation? Yes, and it's strong

We ran the numbers on 36 months of data. Correlation runs from 0 (no relationship) to 1 (move in lockstep).

How closely oil tracks inflation, Oct. 2023 – Sept. 2026

Correlation coefficients, monthly data. Our calculation from FRED data.
0.000.250.500.751.00+0.88Oil % chg vs CPI+0.71Oil % chg vs PPI+0.85Oil price vs CPI+0.48Oil price vs PPI+0.44PPI vs CPI
  • Oil's yearly change vs. CPI: +0.88. The strongest link. When oil is up sharply from a year ago, consumer inflation is up too.
  • Oil's yearly change vs. PPI: +0.71. Strong, but PPI also reflects services, trade margins and other costs.
  • Timing: the link is strongest with a one-month lag (+0.77 for CPI), then fades by month three. Oil moves show up in inflation quickly.
Fair warning: correlation isn't causation, and three years is a short window dominated by one big oil shock. But the pattern matches how energy flows into gas, shipping and production costs.

5. Is the market missing the drop in oil?

WTI oil: from the spring spike to under $90

Monthly average except Nov. 12 (settlement). Sources: FRED; Newsquawk, BigGo Finance.
$0$20$40$60$80$100$120$64Feb '26$91Mar$100Apr$102May (peak)$85Jun$80Jul$84Aug$97Sep$89Nov 12

The case for relief: oil is down about 13% from its May average, and WTI fell roughly 11% across the October PPI collection window, which is why economists expect PPI to cool from 1.3% to 0.4%. Because oil feeds CPI within about a month, falling oil should help the monthly inflation numbers in November and December.

Why the market isn't celebrating yet:

  • The year-ago comparison. A year ago WTI averaged about $60. At about $89 today, oil is still close to 50% higher than last year, so the yearly inflation rates the headlines quote stay elevated until the spring 2026 spike drops out of the comparison next March through May.
  • Core inflation isn't oil. Core CPI, which excludes food and energy, has run 0.3% for three straight months. That's what Waller and the Fed are focused on.
  • Oil is still on a headline leash. Thursday WTI jumped $2.21 after attacks on Saudi energy sites and Hormuz shipping disruptions.

Bottom line

Oil relief is real and should show up in monthly inflation soon. But the Fed is watching core prices and jobs, so it likely won't stop a December hike.

For mortgage rates

If oil keeps falling and core cools, the 10-year could ease from 5% in early 2027, and mortgage rates with it.

What to watch

Today's PPI, oil and Iran headlines, and November CPI on Dec. 10, the day after the Fed decides.

6. What now for home buyers and homeowners

Closing within 30 days and the payment works? Talk with your loan officer about locking before the Fed meeting. Still shopping? Get pre-approved, and negotiate seller credits. With home sales at a 16-year low, sellers are more open to it. Homeowners: set a target with Rate Watch so you hear the moment rates come back.

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FAQ

What is PPI and why does it matter for mortgage rates?

The Producer Price Index tracks wholesale prices. It often leads consumer inflation, and hot readings push the Fed toward hikes and lift the 10-year Treasury, which mortgage rates follow.

Do oil prices affect inflation?

Yes. From October 2023 to September 2026, oil's yearly change and CPI inflation had a +0.88 correlation, with oil tending to show up in CPI about a month later.

Will lower oil prices bring mortgage rates down?

Over time it can help by cooling inflation. But the Fed focuses on core inflation, which excludes energy, and yearly inflation rates will stay high until spring because oil is still well above last year's level.

Sources

  1. BLS PPI and CPI releases; FRED series PPIFIS, CPIAUCSL, MCOILWTICO
  2. Federal Reserve, Waller speech, Nov. 10, 2026
  3. Freddie Mac PMMS, Nov. 12, 2026; Mortgage News Daily, Nov. 10, 2026
  4. U.S. Department of Labor weekly claims, Nov. 12, 2026; NAR existing-home sales via Reuters/Allwork, Nov. 12, 2026
  5. Newsquawk, BigGo Finance, Pakistan Today (oil), Nov. 12–13, 2026
  6. TradingKey and Stocktitan PPI previews (Dow Jones consensus)
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