Wholesale Prices Rise 0.4% on Food, Energy Costs

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he producer price index, which tracks payments to factories, farmers and other producers, rose 0.4% in August on higher costs for energy and good, the Labor Department reported Friday.

The PPI, which measures inflation pressures before they reach retail store shelves, rose 0.1% in July. Excluding food and energy, the “core” index of prices rose a tame 0.1% after dropping 0.2% the month before.

Economists told Bloomberg that economic growth would need to be sustained before companies regain the ability to raise prices, economists said.

Scant signs of inflation outside of energy costs are expected to prompt Federal Reserve policy makers to hold interest rates steady at 1% when they meet on Tuesday, Bloomberg said. At the same time, they want to avoid a sustained drop in prices, or deflation, because it threatens the economy by making it difficult for companies to boost profit margins.

Labor said energy prices jumped 1.2% percent last month after rising 0.3% in July. Gasoline prices rose 6.3% and electricity costs increased 0.5% in August.

Food prices increased 0.7%, which reflected higher costs for beef, dairy products, fruits and vegetables, Labor noted.

Overall, prices were 3.4% percent higher in August than a year ago, compared with a 3% gain in the 12 months ended in July. Core prices are up 0.4% in the last year, up from July's 0.2% year-over-year increase.

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