WASHINGTON -- U.S. wholesale prices increased in February at the
fastest pace in five months, driven by rising gasoline costs.
The producer price index, which measures how much manufacturers
and wholesalers pay for finished goods and materials, increased a
seasonally adjusted 0.4%, the Labor Department said Thursday.
Gasoline prices, up 4.3%, pushed the increase. Overall energy
prices rose 1.3%, the first gain since November.
Removing volatile energy and food components, producer prices
were up a more mild 0.2%.
Economists surveyed by Dow Jones Newswires had forecast overall
wholesale prices would climb 0.5% on a month-to-month basis, while
core producer prices were expected to rise by 0.2%.
Earlier this week, Federal Reserve officials said increasing oil
and gasoline prices "will push up inflation temporarily."
However, in their policy statement, Fed officials said they
expect annual inflation will stay at or below the central bank's
2.0% target. The Fed struck a similar tone a year ago when oil and
food were getting more expensive, and indeed prices moderated in
the second half of 2011.
In January, the Fed projected annual inflation at between 1.4%
and 1.8% for 2012 and between 1.4% to 2.0% for 2013.
The Labor report showed wholesale prices were 3.3% higher last
month than in February 2011. That's well down from the 7.1% annual
increase recorded in July.
Year over year, prices were up 3.0% when removing energy and
food costs.
Moderate inflation would give the Fed leeway to pursue
additional stimulus in an effort to increase employment and prop up
investment. However the labor market is improving, adding more than
200,000 nonfarm jobs for three consecutive months. That has led
some economists to say more bond buying or other measures are not
necessary.
In January, wholesale prices increased 0.1% from the prior
month, and underlying prices, excluding energy and food, rose
0.4%.
In February, food costs decreased by 0.1%, as vegetable, dairy
and meat prices all fell.
Prices for intermediate goods--which are semifinished goods like
lumber or flour that require further processing--grew by 0.7% last
month. Meanwhile, prices of raw materials, known as crude goods,
increased by 0.4% in February.
The Labor Department's producer price index report can be
accessed at: http://www.bls.gov/ppi