WASHINGTON (AP) — A second month of sharp gains in gasoline costs drove wholesale prices higher in September. But outside of the surge in energy, prices were well contained.
Wholesale prices rose 1.1 percent in September following a 1.7 percent gain in August which had been the largest one-month increase in more than three years, the Labor Department said Friday.
In both months, overall prices were pushed higher by gasoline, which rose 9.8 percent in September following an even larger 13.6 percent gain in August.
Core prices, which exclude food and energy, were unchanged in September, the best showing since they held steady in October 2011. In August, core prices rose 0.2 percent.
Food prices, which had jumped 0.9 percent in August, showed a smaller 0.2 percent rise in September.
Wholesale inflation has been stable over the 12 months that ended in September. In that time, overall prices have increased just 2.1 percent. Core inflation is up 2.3 percent over the 12-month period. The government's producer price index measures cost pressures before they reach consumers.
Low inflation means consumers have more money to spend, which helps the economy. It also gives the Federal Reserve more room to keep interest rates low in an effort to spur economic growth. If prices were to begin rising rapidly, the central bank might be forced to raise rates in response.
Paul Ashworth, chief U.S. economist at Capital Economics, said the modest gains in wholesale prices should translate into further moderation in consumer inflation, keeping it close to the Fed's 2 percent inflation target. Ashworth said that would allow the central bank to keep focusing its policy efforts on reducing the unemployment rate.
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