Higher gasoline costs raise US producer prices - WDRB 41 Louisville News

Higher gasoline costs raise US producer prices

Posted: Updated:
(AP Photo/Mark Duncan). In this April 15, 2014 photo, Evelyn Morales assembles blender blades at the Vitamix  manufacturing facility in Strongsville, Ohio. (AP Photo/Mark Duncan). In this April 15, 2014 photo, Evelyn Morales assembles blender blades at the Vitamix manufacturing facility in Strongsville, Ohio.
  • U.S. & World NewsMore>>

  • Pipe break that flooded UCLA dumps 20M gallons

    Pipe break that flooded UCLA dumps 20M gallons

    Wednesday, July 30 2014 11:10 PM EDT2014-07-31 03:10:25 GMT
    The quiet summer campus of UCLA found itself suddenly steeped in water and chaos after a major water pipe burst and spewed some eight million gallons, stranding people in parking garages and flooding the...More >>
    The rupture of a nearly century-old water main that ripped a 15-foot hole through Sunset Boulevard and turned a swath of the University of California, Los Angeles, into a mucky mess points to the risks and expense many...More >>
  • Landslide hits Indian village, killing at least 18

    Landslide hits Indian village, killing at least 18

    Wednesday, July 30 2014 10:49 PM EDT2014-07-31 02:49:32 GMT
    An Indian official says that more than 150 people are feared buried under a landslide that hit a village in western India following torrential rains.More >>
    Rescuers worked in rain Thursday to dig through a remote village in western India where at least 21 people died as a landslide swept away scores of houses, possibly trapping many more people under debris, officials said.More >>
  • Congress cooperates _ and fights _ as recess nears

    Congress cooperates _ and fights _ as recess nears

    Wednesday, July 30 2014 10:39 PM EDT2014-07-31 02:39:26 GMT
    Eager to begin a monthlong break, Congress leavened its customary heavy partisanship on Wednesday with a pinch of compromise, advancing legislation to repair the deeply troubled Department of Veterans Affairs and...More >>
    Eager to begin a monthlong break, Congress leavened its customary heavy partisanship on Wednesday with a pinch of compromise, advancing legislation to repair the deeply troubled Department of Veterans Affairs and working...More >>
By JOSH BOAK
AP Economics Writer

WASHINGTON (AP) - Rising gasoline costs pushed up the prices U.S. companies receive for their goods and services in June, but overall inflation remains tame.

The Labor Department said Wednesday that the producer price index, which measures the cost of goods and services before they reach the consumer, rose 0.4 percent last month. The increase follows a 0.2 percent decrease in May.

Gas costs rose 6.4 percent in June. Steel prices shot up 3 percent. But prices fell for grains, cheese and rental cars to offset some of those increases.

In the past 12 months, producer prices have risen 1.9 percent, roughly in line with the Federal Reserve's inflation target of 2 percent.

But inflation appears unlikely to accelerate based on producer prices. Crude oil prices have fallen in July, after surging last month on reports of Iraq being destabilized by the Sunni militia known as the Islamic State of Iraq and the Levant.

"Nothing here is going to worry the Fed, particularly not when crude oil prices have most recently fallen back," said Paul Ashworth, chief US economist at Capital Economics.

Consumer prices have tended to track the costs for producers. They rose in May in response to food and energy costs increasing earlier in the year for wholesalers. Consumer prices rose 2.1 percent in May compared to the year prior.

Retailer and wholesaler profit margins increased 0.2 percent in June. Excluding the volatile food, energy and profit margin categories, core producer prices were up 0.2 percent last month.

The Fed targets inflation at about 2 percent as a guard against deflation, which can drag down wages and spark a recession. At the same time, the Fed wants to avoid excessive inflation and protect consumers and the purchasing power of the dollar.

Low inflation should provide a foundation for consumers to spend, but it also reflects the weak recovery from the Great Recession that is now entering its sixth year. Businesses are reluctant to raise their prices, if their customers lack the income to afford their goods and services.

Wage growth has been meager and unemployment, now at 6.1 percent, has been slow to recede since the recession. That has limited consumer spending, which accounts for about 70 percent of all economic activity.

Still, low inflation has enabled the Fed to pursue extraordinary measures to boost the economy. This includes holding shorter-term interest rates near zero and purchasing bonds to depress longer-term interest rates. It has begun to unwind some of those measures, cutting its monthly bond-buying program to $35 billion from $85 billion last year.

Those bond purchases had ensured low interest rates that encouraged investors to pour money into the economy.

Copyright 2014 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

Powered by WorldNow
All content © Copyright 2000 - 2014 WorldNow and WDRB. All Rights Reserved. For more information on this site, please read our Privacy Policy and Terms of Service.