U.S. businesses sold goods and services at slightly higher prices in August, though inflation pressures remained weak overall.
The producer-price index, a measure of inflation experienced by businesses, rose 0.2% in August from a month earlier, the Labor Department said Wednesday. The increase, while modest, was the biggest since April.
Higher gasoline prices accounted for most of the jump. Excluding food and energy components, so-called core prices increased 0.1%, a meager jump.
Economists surveyed by The Wall Street Journal had expected a 0.3% gain in overall producer prices and a 0.2% rise in core prices.
The report offers the latest sign inflation in the U.S. remains weak despite conditions that would normally be accompanied by stronger price growth, including steady job growth, low unemployment and a pickup in economic growth. Over the past year, overall producer prices have risen 2.4% while core prices have climbed 2%.
Producer prices often give a hint of where consumer-price inflation is headed, since businesses tend to pass on some cost increases to their customers. The Federal Reserve is closely monitoring inflation as it considers another increase in short-term interest rates by year end. But inflation–as measured at the consumer level–has undershot the central bank’s projections this year. Low inflation is posing an obstacle to the Fed’s interest-rate plans.
Source: Dow Jones