Wholesale Prices Calm In August As Energy Costs Ease

Wholesale prices rose ever so slightly in August, held in check by declining automobile and energy prices.

Wholesale prices rose ever so slightly in August, held in check by declining automobile and energy prices.

The Labor Department said Tuesday its Producer Price Index edged up 0.1 percent last month, the same as in July and well below the 0.5 percent increase seen in June. The so-called “core” index - which excludes the sometimes volatile food and energy components – fell by 0.4 percent, on the heels of July’s 0.3 percent decline.

The latest read on prices, including those at the consumer level, point to slowing inflation and suggest, at least for now, that the Federal Reserve was right to recently curtail its campaign of raising interest rates. Last week, the Labor Department said the Consumer Price Index rose by just 0.2 percent in August, restrained by cooling housing and energy prices.

The Fed will meet Wednesday to determine its next move on interest rates, and central bankers are widely expected to leave rates unchanged.

Within manufacturing, the PPI for all industries rose 0.1 percent, the same rate as in July. Higher prices received by manufacturers of petroleum and coal products, electrical equipment and appliances, plastic and rubber products, fabricated metal products, and machinery outweighed falling prices paid to providers of transportation equipment, wood product manufacturing, and computer and electronic products.

In August, the PPI for total manufacturing industries was 5.3 percent above the year-ago level.

For the 12 months ending August, overall wholesale prices climbed 3.7 percent, while the core rate was up 0.9 percent, the lowest reading since March 2004.

The index for finished energy goods rose by 0.3 percent in August, after a 1.3 percent rise in July. Prices for capital equipment fell 0.3 percent after a 0.2 percent pullback in July. The latest retreat was led by prices for light motor trucks (down 3.4 percent), and the prices of passenger cars, electronic computers, and communication and related equipment also fell last month.

Prices for civilian aircraft, industrial material handling equipment, transformers and power regulators, truck trailers, and heavy motor trucks increased in August.

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