U.S. Wholesale Costs Rose Last Month On Gas Prices

The Associated Press

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U.S. wholesale prices increased in December, pushed up by rising gasoline prices and energy costs. But overall inflation remained mild.

The Labor Department said Wednesday that the producer price index, which measures costs before they reach the consumer, rose 0.4 percent last month from November. That ends three straight months of falling wholesale prices.

Gas prices increased 2.2 percent after recent declines. Home heating oil costs grew at the fastest pace in 10 months, while diesel fuel prices increased at the biggest clip in almost four years.

Excluding volatile energy and food costs, so-called core prices increased 0.3 percent in December. That was partly because of a one-time bump in tobacco costs.

Over the past 12 months, overall prices have risen a modest 1.2 percent and core prices are up just 1.4 percent. Both are well below the Federal Reserve's 2 percent inflation target.

Businesses have struggled to raise prices because of historically high levels of unemployment and meager wage growth. Low inflation has also allowed the Fed to pursue extraordinary stimulus programs to try and boost economic growth.

In December, prices for alcohol, tobacco, pharmaceuticals and autos all rose. The 3.6 percent jump in tobacco prices caused by state and local government tax hikes.

Food costs fell 0.6 percent, led by a 13.4 percent drop in vegetables and declining prices for pork, chicken, beef and dairy products.

The increase in gasoline prices reversed two months of sharp declines. Still, prices are relatively low.

The average price of a gallon of gas was $3.31, according to AAA's Daily Fuel Gauge Report. That's up from $3.23 a gallon one month ago.

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