Producer Price Index Rises 0.1% in July

roducer prices rose 0.1% in July as cheaper cars and a drop in the cost of food offset higher energy prices, the Labor Department reported Friday.

The increase in the measure of prices paid to factories, farmers and other producers followed a 0.3% decline in June. The core rate, which excludes food and energy, also rose 0.1%, the smallest gain since February.

An increase in the producer price index could indicate strong demand for goods, which would mean fewer shipments for trucking companies. However, if inflation begins to accelerate too quickly, it could also hamper the economic recovery.

So far this year, producer prices are rising at a 4.4% annual rate compared with a 4.3% increase at the same time last year. Core prices are increasing at a 2.3% annual pace.

Energy prices rose 2.3% in July, the biggest rise since January, and was 11.3% higher than a year earlier. Food prices dropped 1.6%, the biggest decrease since April 2002, after a decline of 0.6% percent a month earlier.

Labor also said passenger car prices fell 0.4% in July, the most since June 2003. Costs of light trucks were unchanged.

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