WASHINGTON – U.S. producer prices rose in September, as wholesale energy and food costs increased. But overall inflation appears to be limited, as has been the case for several years.
Prices have barely stirred over the past year, a sign that inflation remains largely in check despite steady hiring gains.
The Labor Department said Friday that its producer price index, which measures cost pressures before they reach the consumer, increased 0.3 per cent in September. Oil prices have steadied and edged upward recently, causing energy goods to rise 2.5 per cent last month. Food prices at the wholesale level rose 0.5 per cent, with a 26 per cent jump in chicken eggs and 10.5 per cent increase in vegetables.
Core inflation, which excludes the volatile energy and food categories, rose 0.3 per cent.
Over the past year, wholesale prices have increased just 0.7 per cent.
The Federal Reserve would like to see inflation closer to 2 per cent as a hedge against deflation, which would cause a drop in wages and prices that could choke off economic growth.
Yet the Fed’s preferred inflation gauge has risen less than 1 per cent in the past year. This has made the central bank cautious about raising the short-term interest rate it controls. It increased that rate from a record low near-zero for the first time in nine years last December. The financial markets expect a second rate hike at the upcoming meeting this December.