Rising Services Costs Lift Producer Prices Higher in February

U.S. wholesale prices rose 0.2 percent in February. A pickup in services prices offset a drop in the cost of food and energy.

The Labor Department said Wednesday that the February increase in its producer price index was half January's 0.4 percent gain. Over the past year, producer prices, which show inflation before it reaches consumers, rose 2.8 percent.

Energy prices fell 0.5 percent in February, and food prices fell 0.4 percent as fresh and dry vegetable prices plunged 27.1 percent, most since May 2007.

The wholesale price of services rose 0.3 percent in February, matching the January increase. Transportation and warehousing prices rose 0.9 percent, most since September. Excluding volatile food and energy prices, so-called core wholesale inflation rose 0.2 percent for the third straight month.

Prices have been rising faster for producers than for consumers. The Labor Department reported Tuesday that consumer prices rose just 2.2 percent over the past year. Core consumer inflation posted a 12-month gain of just 1.8 percent.

The Federal Reserve wants to see inflation at roughly a 2 percent annual pace. But the Fed's preferred inflation measure has usually come in below that target for the past six years.