US diesel prices have recorded their sharpest annual increase, while the Bloomberg heating oil index has risen 150% over the past year, its largest gain since records began in 1987. Bloomberg Intelligence senior commodity strategist Mike McGlone compared $6.50 diesel with the $4-a-gallon gasoline peak in 2008, which preceded a steep demand decline. He said similar demand destruction (reduced consumption after prices rise) may now emerge. Fuel costs feed into headline inflation and affect freight, agriculture and manufacturing, raising the risk that inflation remains elevated through winter. The development adds pressure to the Federal Reserve as policymakers weigh hawkish views against signs of a stabilizing labor market. Cleveland Fed President Beth Hammack has said households have limited room to cut spending after switching from steak to cheaper staples such as hot dogs and beans. Atlanta Fed surveys also show rising business inflation expectations. Markets will assess the risk as this week’s Personal Consumption Expenditures (PCE) inflation data approaches and watch whether demand weakens as it did in 2008 or supply constraints keep prices higher for longer.