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Tags: Producer Prices | Gasoline | Economy

More Expensive Gasoline Lifts Wholesale Prices in March

Tuesday, 14 April 2015 08:53 AM EDT

Higher gas costs drove up wholesale prices last month, ending a string of four straight declines.

The producer price index increased 0.2 percent in March, after sharp drops in the two previous months, the Labor Department said Tuesday. The index measures prices before they reach the consumer.

Excluding the volatile food and energy categories, core prices also rose 0.2 percent.

In the past year, wholesale prices have plummeted 0.8 percent, the sharpest drop in the four years since the government updated its methods for calculating the index. Cheaper gas caused most of the decline. Core prices have risen 0.8 percent in the past 12 months.

Last month's increase suggests inflation has stabilized and may move slightly higher in the months ahead. The government reports consumer prices Friday.

Federal Reserve officials are closely watching measures of inflation as they consider when they will raise the short-term interest rate they control. That rate has been pinned at zero for more than six years.

Fed officials have said they want to be "reasonably confident" that inflation will move closer to its 2 percent goal before they raise rates. Many economists predict the Fed won't move until September.

Gas prices fell about 60 percent from last June through January, when they reached a six-year low of $2.03. But they moved up since then. Gas prices averaged $2.39 a gallon nationwide Monday, according to AAA. That's five cents cheaper than a month earlier.

The Fed aims for 2 percent inflation to guard against deflation, which can cause a destabilizing drop in prices and wages.

Yet the Fed's preferred measure of inflation has been stuck below 2 percent for nearly three years. Another factor holding down prices has been the strong U.S. dollar, which makes imported goods cheaper.

Some Fed officials pointed to the low inflation readings in their March meeting and argued for delaying the first rate increase until later this year, according to minutes of the meeting, which were released last week. Other officials supported making the first move in June.

After that meeting, the Fed said in a statement that it wanted to see more improvement in the job market and to be confident that inflation would move toward its 2 percent goal before raising rates.

© Copyright 2023 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

Higher gas costs drove up wholesale prices last month, ending a string of four straight declines.
Producer Prices, Gasoline, Economy
Tuesday, 14 April 2015 08:53 AM
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