Economy

US Wholesale Inflation Falls Short of Projections

The producer-price index, a measure of inflation experienced by businesses, rose 0.2% in August from a month earlier, the Labor Department said Wednesday.

But despite reversing the drop seen in July, the Producer Price Index still fell short of analyst expectations. The price of fuel could remain elevated for awhile after all the damage caused to refining operations in the Houston area after Hurricane Harvey.

But even so, weak United States inflation has stumped monetary policymakers and economists this year.

Inflation is being closely watched for clues on the timing of the next interest rate increase from the Federal Reserve. Economists surveyed by MarketWatch had forecast a 0.3% increase in wholesale inflation after a small decline in July. It was the largest monthly increase since a 0.5 per cent gain in April. But inflation-as measured at the consumer level-has undershot the central bank's projections this year.

The increase in producer prices was partly due to a jump in energy prices, which surged up by 3.3% in August after falling by 0.3% in the previous month.

Within energy, there was a double-digit monthly increases in residual fuels, home heating oil, and jet fuel, which rose 18.6 per cent, its fastest pace in eight years.

US inflation at the wholesale level rebounded toward the end of summer, but most of the increase reflected higher gasoline prices.

A almost 10% jump in the cost of gas accounted for most of the increase in wholesale inflation last month.

Air transportation services rose 1.4 per cent, the biggest increase since July 2009, while truck hauling services moved up 0.9 per cent, the largest increase in three years. Core prices had been expected to rise by 0.2%.



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