WASHINGTON - U.S. wholesale prices increased in December, pushed up by rising gasoline prices and energy costs. But overall inflation remained mild.
The Labor Department said Wednesday
that the producer price index, which measures costs before they reach the
consumer, rose 0.4 percent last month from November. That ends three straight
months of falling wholesale prices.
Gas prices increased 2.2 percent after
recent declines. Home heating oil costs grew at the fastest pace in 10 months,
while diesel fuel prices increased at the biggest clip in almost four years.
Excluding volatile energy and food
costs, so-called core prices increased 0.3 percent in December. That was partly
because of a one-time bump in tobacco costs.
Over the past 12 months, overall
prices have risen a modest 1.2 percent and core prices are up just 1.4 percent.
Both are well below the Federal Reserve's 2 percent inflation target.
Businesses have struggled to raise
prices because of historically high levels of unemployment and meager wage
growth. Low inflation has also allowed the Fed to pursue extraordinary stimulus
programs to try and boost economic growth.
In December, prices for alcohol,
tobacco, pharmaceuticals and autos all rose. The 3.6 percent jump in tobacco
prices caused by state and local government tax hikes.
Food costs fell 0.6 percent, led by a
13.4 percent drop in vegetables and declining prices for pork, chicken, beef
and dairy products.
The increase in gasoline prices
reversed two months of sharp declines. Still, prices are relatively low.
Falling gas prices through much of
2013 has limited inflation.
Raw material costs have also tumbled,
keeping inflation in check for producers. Prices for corn, wheat, soybeans,
cane sugar, coal and iron ore have each dropped over the past 12 months. Raw
material costs increased in December, but the previous declines suggest that
overall inflation should be tame in the months ahead.
Last month Fed officials trimmed the
size of their monthly bond purchases $10 billion to $75 billion. But Fed
Chairman Ben Bernanke warned that extremely low inflation was a concern. He said
that the central bank could continue to pump money into the economy to
stabilize inflation at target.
The bond purchases are aimed at lowering long-term interest rates to encourage more borrowing and spending.