Wholesale Inflation Remains Low

Wholesale prices rose last month, but outside of volatile food and energy costs inflation remained tame.

The Producer Price Index rose 0.4 percent in August after increasing 0.2 percent in July, the Labor Department said Thursday. The index measures price changes on products before they reach the consumer.

But excluding food and energy costs, so-called "core" producer prices were relatively flat. They rose just 0.1 percent and are up 1.3 percent in the past year.

There has been little threat of inflation in recent quarters. The weak economy has stifled demand at every stage of the production chain. That makes it tough for producers to raise the prices they charge to retailers.

Concerns about deflation grew this spring after prices declined for three straight months. July's increase quieted most of those fears. Economists said Thursday's report confirmed that deflation is not an immediate threat.

Energy costs increased by the most since January. Gasoline costs rose 7.5 percent. Home heating oil costs increased 7.0 percent. After surging in early August, energy costs declined to more normal levels by the end of the month.

Food prices fell 0.3 percent, mostly because of a decline in the cost of vegetables. Irish potatoes were the outlier. Their prices rose 27.2 percent the most since June 2008.

The news comes ahead of a Friday report from the Labor Department about consumer prices. They also are expected to rise by a small amount.