By Canadian Press

US wholesale prices rose just 0.2 per cent in September

Oct 10, 2018 | 7:15 AM

WASHINGTON — U.S. wholesale prices rose a mild 0.2 per cent 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 per cent 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 per cent in September and 2.5 per cent 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 per cent 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 per cent, the largest monthly gain in nearly nine years. The increase was mostly driven by higher wholesale prices for airline tickets, which jumped 5.5 per cent, the biggest increase in a decade.

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Wholesale food costs fell 0.6 per cent last month and gas prices dropped 3.5 per cent, 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 per cent 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 per cent in August, the latest data available, down slightly from a 2.3 per cent annual gain the previous month.

Christopher Rugaber, The Associated Press

by Canadian Press

US wholesale prices rose just 0.2 per cent in September

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