US wholesale prices up 08 per cent in June driven higher by

AddThis Sharing ButtonsShare to TwitterTwitterShare to FacebookFacebookShare to RedditRedditShare to 電子郵件Email US wholesale prices up 0.8 per cent in June, driven higher by sharp jump in gas prices WASHINGTON – A big jump in gasoline prices pushed wholesale inflation up in June by the largest amount in nine months. But underlying inflation showed only a modest gain.Wholesale prices rose 0.8 per cent in June compared with May when prices had risen 0.5 per cent, the Labor Department reported Friday. It was the biggest gain since a 1 per cent jump in September and was driven by a 7.2 per cent surge in gasoline prices.Outside of the volatile energy and food sectors, core inflation was up just 0.2 per cent in June.Core prices have risen 1.7 per cent over the past 12 months. Aside from sharp swings in gas prices, inflation has increased very slowly over the past year, giving the Federal Reserve the room to keep interest rates low to boost the economy.The government’s Producer Price Index measures inflation before it reaches the consumer. Consumer prices have been rising at a modest rate as well. Over the 12 months ending in May, consumer prices outside of food and energy were up just 1.7 per cent. That’s below the Fed’s 2 per cent target for inflation.For June, energy prices at the wholesale level were up 2.9 per cent, reflecting the big jump in gas prices. It was the biggest increase since February.Food costs rose 0.2 per cent in June, a moderation after a larger 0.6 per cent May increase in food that had been driven in part by a surge in the price of eggs. For June, egg prices retreated, falling 26.8 per cent, the biggest one-month drop in seven years.The wholesale price of passenger cars rose 0.8 per cent in June, the biggest increase since November 2011, but most other categories showed moderation. Furniture prices were up 0.3 per cent.Total wholesale prices were up 2.5 per cent in June compared to a year ago.The combination of modest economic growth and high unemployment has kept wages from rising quickly. That’s made it harder for retailers and other firms to raise prices.At its meeting in June, the Fed said it plans to keep the short-term interest rate it controls at a record low near zero until the unemployment rate falls below 6.5 per cent, provided inflation remains under control. Unemployment is 7.6 per cent.The Fed also said it would continue purchasing $85 billion in mortgage and Treasury bonds each month. The purchases are intended to lower long-term rates and encourage more borrowing and spending. But Chairman Ben Bernanke said after the meeting that the Fed could slow those purchases later this year if the economy continued to strengthen.Most economists interpreted his remarks that to mean the Fed could begin to scale back its bond buying at its September meeting. Stock and bond prices fell sharply in the days after his comments.However this week Bernanke stressed that the economy still needs the Fed’s low interest-rate policies because unemployment remains high and inflation is below the Fed target. His comments were his latest attempt to stress that the Fed will continue to stimulate the economy, even after it begins to slow the bond purchases.“A highly accommodative monetary policy for the foreseeable future is what is needed for the U.S. economy,” Bernanke told the National Bureau of Economic Research on Wednesday.The comments helped drive the Dow Jones industrial average and the Standard & Poor’s 500 index to all-time highs on Thursday. by Martin Crutsinger, The Associated Press Posted Jul 12, 2013 8:45 am MDT

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