Producer Prices Show Biggest Rise in Four Years

(CN) – U.S. producer prices rose more than expected in January, recording their largest gain in four years amid increases in the cost of energy products and some services. However, the continued strength of the dollar has kept inflation at bay.

The Labor Department said Tuesday that the producer price index, which measures price changes before they reach consumers, increased 0.6 percent between January and December.

The index rose 1.6 percent over the past year, a relatively low level of inflation that suggests few costs are likely to be passed along to consumers.

Rising energy costs have recently become a prime source of inflation, reversing a trend in recent years in which falling oil prices were suppressing inflation.

Wholesale prices for gasoline jumped 12.9 percent over the past month and 32.3 percent over the past year.

Wholesale food costs were unchanged in January. Higher prices for pork, eggs and milk were offset by lower costs for vegetables, fresh fruits and beef, among other items.

Excluding energy, food and services for wholesaling and retailing, producer prices increased just 0.2 percent in January.

If prices continue to rise, the Federal Reserve could take a more aggressive approach to raise interest rates to stem any potential for inflation to surpass the central bank’s 2 percent to 2.5 percent target.

The producer price gauge is one of three monthly inflation reports released by the Labor Department. The other two are import costs and consumer prices.

%d bloggers like this: