Gas Prices Fuel Surge in Producer Prices

producer price index
Charles Rex Arbogast/AP
By Lucia Mutikani

WASHINGTON -- U.S. producer prices recorded their largest increase in six months in December as the cost of gasoline rebounded strongly, but inflation pressures remained benign.

The Labor Department said Wednesday its seasonally adjusted producer price index rose 0.4 percent last month, the biggest rise since June, after slipping 0.1 percent in November.

December's rise in prices received by the nation's farms, factories and refineries ended two straight months of declines and matched economist expectations. In the 12 months through December, producer prices increased 1.2 percent after advancing 0.7 percent in November.

Wholesale prices excluding volatile food and energy costs increased 0.3 percent, the biggest gain since July 2012, after ticking up 0.1 percent the prior month. However, tobacco accounted for nearly half the increase.

In the 12 months through December, the so-called core PPI rose 1.4 percent after increasing 1.3 percent in November.

U.S. Treasury debt prices fell on the report, while U.S. stock index futures and the dollar were little changed.

A separate report showed manufacturing activity in New York state jumped to its highest level in 20 months in January as new orders soared.

The New York Federal Reserve's "Empire State" general business conditions index rose to 12.51 in January from a revised 2.22 in December to hit its highest since May 2012.
Economists polled by Reuters had expected a reading of 3.75.

New orders rose to 10.98, a two-year high according to the New York Fed, from a revised -1.6.

While economic activity has picked up, inflation continues to run very low because of labor market slack.

That could see the Federal Reserve keeping interest rates near zero for a while. The U.S. central bank has started scaling back its monetary stimulus, reducing its monthly bond purchases to $75 billion from $85 billion starting this month.

"I think the Fed still thinks inflation is too low," said Gus Faucher, senior economist with PNC Financial Services in Pittsburgh. "That said [policymakers] will still reduce their asset purchases by $10 billion to $15 billion at the end of the month. We are see underlying growth at 3 percent and that's better than what we've had," he added.

The Fed's policymaking group meets on Jan. 28-29.

Consumer inflation data Thursday is expected to show prices rising in December, according to a Reuters survey. Still, inflation remains below the Fed's 2 percent target.

Last month, wholesale gasoline prices rose 2.2 percent, accounting for more than half of the increase in the energy index, which was up 1.6 percent.

Wholesale food prices fell 0.6 percent in December after being flat the prior month. Food prices were held down by the cost of pineapples, which recorded their biggest drop since May 2006. Pork prices also weighed, dropping by the most since September 2012.

Tobacco prices rose 3.6 percent. Passenger car prices, which rose 0.2 percent, and light truck prices, which advanced 0.5 percent, also helped to lift the core PPI.

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skcarcomed_0

irqhide
Does that make you sad, Al?


Then go fire some more imaginary employees. Then come back here and brag about it to your simple conservative friends.

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LOL> Skipper how come you\'re not bragging today about how much money you pretend to have.

January 15 2014 at 6:26 PM Report abuse rate up rate down Reply
skcarcomed_0

irqhide
I may be easy, but you certainly are ignorant.

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GEE Skippy, can\'t you stop your whining and complaining for just one day.

January 15 2014 at 6:25 PM Report abuse rate up rate down Reply
skcarcomed_0

chris1011
These guys have to babble, they have nothing of substance to say. My guess is that these couple guys are bummed because they made poor investment decisions and therefore are not doing well financially. So they come here on a financial website and try to pretend things are rotten, and go on endlessly about how unfair things are. Why else would they be ragging 24/7?

hey Racquet, Dembait and Alfarce, - I feel for you, honest!

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Chrissy\'s batting a thousand today with his snide, petty unproductive comments. At least that\'s what Chris himself calls comments like what he posted.

January 15 2014 at 6:22 PM Report abuse rate up rate down Reply
skcarcomed_0

irqhide
They do serve a purpose. They amuse me.

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You meant your cellmates of course Skipper.

January 15 2014 at 6:20 PM Report abuse rate up rate down Reply
skcarcomed_0

chris1011
It\\\'s the same song and dance every day - it never changes. They have a set script that they copy, sent to them from their overlords, and they get a nickle per post. Why else do you think they are on every day for 10-12 hours, and post hundreds of posts of pure BS. They are easily distracted by libruls and anything to do with gubmint.
Oh look, squirrel! go get \\\'im Racquet!

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More of Chrissy\'s snide, petty and uproductive comments. Hey I\'m just calling them like Chris himself calls them. Right Chrissy?

January 15 2014 at 6:18 PM Report abuse rate up rate down Reply
skcarcomed_0

irqhide
I fly the plane, slow kid. YOU sit in back.

So how many \"employees\" did you fire today?

You must know you\'re just a huge joke. You know that, right?

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You meant you pretend to fly a plane Skipper. In your land of make be-LIE-ve.
You\'re quite a funny little fellow yourself Skipper.

January 15 2014 at 6:16 PM Report abuse rate up rate down Reply
skcarcomed_0

irqhide
This is so cute. Al pretends he has a business, and Dems and racquet just whine to hear the sound of their own voices.

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LOL> You pretend everything in your land of make be-LIE-ve old Skippy. Oh and by the way you\'re whiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiining again.

January 15 2014 at 6:15 PM Report abuse rate up rate down Reply
unitedpaintings

You Lib-Tards are a riot. LMAO

January 15 2014 at 2:41 PM Report abuse +1 rate up rate down Reply