Tags: producer | prices | economy

Producer Prices Increase for First Time in 3 Months

in baby magnet letters, 'prices' shown on a fifty dollar bill. Lower case colorful letters sloping upward
(David Watmough/Dreamstime)

Wednesday, 10 October 2018 09:49 AM

U.S. wholesale prices rose a mild 0.2 percent last month, held down by lower food and energy costs, suggesting that inflation remains in check despite the economy’s robust growth.

The Labor Department said Wednesday that its producer price index — which measures inflation before it reaches consumers — rose 2.6 percent compared with a year earlier, the smallest increase since January. Wholesale prices rose in September after two months of flat or declining readings.

Excluding the volatile food and energy categories, core wholesale prices rose 0.2 percent in September and 2.5 percent from a year earlier.

Inflation has crept higher this year, eroding the value of Americans’ paychecks. Yet core prices remain close to the Federal Reserve’s target of 2 percent and have yet to show signs of rapid acceleration.

There were some signs of rising costs in Wednesday’s report: Transportation and warehousing prices rose 1.8 percent, the largest monthly gain in nearly nine years. The increase was mostly driven by higher wholesale prices for airline tickets, which jumped 5.5 percent, the biggest increase in a decade.

Wholesale food costs fell 0.6 percent last month and gas prices dropped 3.5 percent, declines that could lower consumer prices in the coming months.

The Federal Reserve is keeping a close eye on price changes as it monitors the economy for signs of overheating. The unemployment rate fell to a 49-year low of 3.7 percent last month, which could spur greater wage increases in the coming months. Companies may then have to raise prices to offset the costs of higher pay.

So far, there is only limited evidence that such a trend is emerging. Average hourly pay has picked up but is still increasing at a modest pace. The Fed’s preferred inflation gauge increased just 2.2 percent in August, the latest data available, down slightly from a 2.3 percent annual gain the previous month.

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Economy
U.S. producer prices rose for the first time in three months amid a surge in gauges reflecting airfares and rail-transportation costs, a Labor Department report showed Wednesday in Washington.
producer, prices, economy
309
2018-49-10
Wednesday, 10 October 2018 09:49 AM
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