Wholesale inflation up in June


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 percent in June compared with May when prices had risen 0.5 percent, the Labor Department reported Friday. It was the biggest gain since a 1 percent jump in September and was driven by a 7.2 percent surge in gasoline prices.

Outside of the volatile energy and food sectors, core inflation was up just 0.2 percent in June.

Core prices have risen 1.7 percent 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. During the 12 months ending in May, consumer prices outside of food and energy were up just 1.7 percent. That’s below the Fed’s 2 percent target for inflation.

For June, energy prices at the wholesale level were up 2.9 percent, reflecting the big jump in gas prices. It was the biggest increase since February.

Food costs rose 0.2 percent in June, a moderation after a larger 0.6 percent 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 percent, the biggest one-month drop in seven years.

The wholesale price of passenger cars rose 0.8 percent in June, the biggest increase since November 2011, but most other categories showed moderation. Furniture prices were up 0.3 percent.

Total wholesale prices were up 2.5 percent in June compared to a year ago.

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 percent, provided inflation remains under control. Unemployment is 7.6 percent.

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.


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