US wholesale inflation higher as August producer prices rise 1.7%

US wholesale inflation ticked higher in August as producer prices rose 1.7% during the month, according to newly released data from the Labor Department. The monthly increase contrasts against a 0.9% decline in July, and is sharply above — more than double — what many analysts were expecting.

"We are concerned about the outlook for inflation later in 2010 and this report suggests that inflation pressures may be beginning to stir in manufacturing," John Ryding and Conrad DeQuadros of RDQ Economics was quoted on MarketWatch.com.

The Labor Department’s Producer Price Index data, which measures prices at the factory door and inflation pressures before they reach the consumer, showed the bulk of the increase came from higher energy costs.

Gasoline stood out the most. Prices at the pump jumped 23% for the month. Heating-oil costs surged 21.3%. The price of food was up 0.4%. However, producer prices are actually down 4.3% compared to a year earlier. (That follows a record 6.8% 12-month decline in July.)

The core wholesale inflation rate for August, which excludes volatile energy and food costs, rose just 0.2% — although core prices have climbed 2.3% in the past year.

The government’s Consumer Price Index (CPI) for August is scheduled for release on Wednesday at 8:30 AM ET. The CPI measures inflation pressures at the consumer level.

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