A measure of U.S. wholesale prices rose last month by the most in five months, pushed higher by more expensive gas and pharmaceuticals. But outside those increases, inflation was mild.
The producer price index grew a seasonally adjusted 0.7 per cent in February from January, according to the US Labor Department. That’s up from 0.2 per cent in the previous month. Wholesale gas prices increased 7.2 per cent.
Even with the increase, wholesale prices have risen just 1.7 per cent in the past 12 months. That’s below the Federal Reserve’s 2 per cent inflation target. Mild inflation gives the Fed more latitude to continue with its aggressive policies to spur more economic growth.
The index measures the cost of goods before they reach consumers. Wholesale prices are what manufacturers and farmers receive for their products from retailers and distributors.
Excluding volatile food and energy costs, core wholesale prices rose only 0.2 per cent last month. In the past 12 months, core prices have increased 1.7 per cent.
Wholesale food prices fell 0.5 per cent in January, led by an 18 per cent drop in vegetable costs, the most in nearly two years. The price of broccoli, cauliflower and lettuce all fell sharply.
Higher wholesale prices don’t always mean consumers will soon pay more. However the more food truck owners have to pay for their food, the lower their profits become.