An increase in the cost of gasoline drove wholesale inflation higher in June.
Wholesale prices rose 0.8 percent in June compared with May when prices had risen 0.5 percent, the Labor Department said 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.
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 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.
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 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. Chairman Ben 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 if it decides 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.
Here’s the full Labor Department report:
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The AP contributed to this report. Featured image Getty Images.