The
Department of Labor reported U.S. producer prices recorded their largest
increase in six months in December as the cost of gasoline rebounded strongly,
but inflation pressures remained low. The seasonally adjusted producer price
index rose 0.4 percent in December, the biggest rise since June, after slipping
0.1 percent in November.
The rise in December
prices received by the nation's farms, factories and refineries ended two
straight months of declines and was in line with consensus expectations. For
2014, producer prices increased 1.2 percent after rising 0.7 percent in
November.
Even with the
jump in economic activity, inflation continues to be low due to the labor
market slack. This may result in the Federal Reserve continue to keep interest
rates near zero.
Consumer
inflation data Thursday is expected to show prices rising in December,
according to a Reuters survey. Still, inflation remains below the Fed's 2
percent target. Last month, wholesale gasoline prices rose 2.2 percent,
accounting for more than half of the increase in the energy index, which was up
1.6 percent.
Wholesale
food prices fell 0.6 percent in December after being flat the prior month. Food
prices were held down by the cost of pineapples, which recorded their biggest
drop since May 2006. Pork prices also weighed, dropping by the most since
September 2012.
Tobacco
prices rose 3.6 percent. Passenger car prices, which rose 0.2 percent, and
light truck prices, which advanced 0.5 percent, also helped to lift the core
PPI.
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