US Aug producer prices rise on energy rebound

WASHINGTON - US producer prices rose slightly more than expected in August as energy prices recorded their first increase since March, government data showed on Thursday, calming fears of deflation for now.

By (Reuters)

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Published: Thu 16 Sep 2010, 7:26 PM

Last updated: Mon 6 Apr 2015, 11:51 AM

The Labor Department said the seasonally adjusted index for prices paid at the farm and factory gate increased 0.4 percent, the largest increase in five months, after gaining 0.2 percent in July.

Analysts polled by Reuters had expected producer prices to rise 0.3 percent last month. In the 12 months to August, producer prices increased 3.1 percent, slowing from the prior month’s 4.2 percent increase.

Producer prices last month were bumped up by a 2.2 percent jump in energy costs. Gasoline prices surged 7.5 percent, the largest increase since January, after falling 2.2 percent in July. Food prices fell 0.3 percent after rising 0.7 percent in July.

Stripping out volatile food and energy costs, core producer prices edged up 0.1 percent last month, matching market expectations. Core PPI increased 0.3 percent in July.

Inflation remains muted amid lackluster domestic demand, which is constraining producers’ ability to pass on increases to consumers. The Federal Reserve is expected to renew its pledge to keep monetary policy accommodative to support the economic recovery at a regular meeting next Tuesday.

Last month, core PPI was held back by a 0.4 percent decline in passenger car prices, which offset a 0.2 percent increase in the cost of light motor trucks, the Labor Department data showed.

In the 12 months to August, the core producer price index rose 1.3 percent after increasing 1.5 percent in July. The year-on-year increase was in line with market expectations.

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