U.S. wholesale prices jump 1.1 percent in September
By MARTIN CRUTSINGER AP Economics Writer October 12, 2012 8:58AM
Updated: October 12, 2012 2:16PM
WASHINGTON — A second month of sharp gains in gasoline costs drove wholesale prices higher in September. But outside of the surge in energy, prices were well contained.
Wholesale prices rose 1.1 percent in September following 1.7 percent gain in August which had been the largest one-month gain in more than three years, the Labor Department said Friday.
In both months, overall prices were pushed higher by gasoline, which rose 9.8 percent in September following an even larger 13.6 percent rise in August.
Core prices, which exclude food and energy, were unchanged in September, the best showing since they were also unchanged in October 2011. In August, core prices rose 0.2 percent.
Food prices, which had jumped 0.9 percent in August, showed a smaller 0.2 percent rise in September.
Wholesale inflation has been stable over the 12 months that ended in September. In that time, overall prices have increased just 2.1 percent. Core inflation is up 2.3 percent over the 12-month period.
Low inflation means consumers have more money to spend, which helps the economy. It also gives the Federal Reserve more room to keep interest rates low in an effort to spur economic growth. If prices were to begin rising rapidly, the central bank might be forced to raise rates in response.
Food prices have been rising since June and are expected to keep climbing, reflecting the severe drought this year in the Midwest. That has raised the price of corn, soybeans and other grains.
Corn is used in animal feed and most products found in the supermarket, from cereal to cosmetics. More expensive corn prices can push up beef and pork prices.
Energy prices have eased since September but could rise further because of continued tension in the Middle East.
Gas prices averaged $3.81 a gallon nationwide on Wednesday, up three cents from a month ago, according to a survey by AAA’s Fuel Gauge.
The government will issue its September report on consumer prices on Tuesday. In August, consumer prices rose 0.6 percent. The gain was also because of a big jump in gas prices. Excluding food and energy costs, consumer prices inched up just 0.1 percent.