Higher gasoline costs raise US producer prices - NEWS10 ABC: Albany, New York News, Weather, Sports

Higher gasoline costs raise US producer prices

Posted: Updated:
(AP Photo/Mark Duncan). In this April 15, 2014 photo, Evelyn Morales assembles blender blades at the Vitamix  manufacturing facility in Strongsville, Ohio. (AP Photo/Mark Duncan). In this April 15, 2014 photo, Evelyn Morales assembles blender blades at the Vitamix manufacturing facility in Strongsville, Ohio.
  • NationalMore>>

  • Doctor: Patient killed caseworker before gunfight

    Doctor: Patient killed caseworker before gunfight

    Thursday, July 24 2014 11:45 PM EDT2014-07-25 03:45:18 GMT
    Police in suburban Philadelphia are investigating a shooting at a hospital campus and say they have reports people have been injured and a suspect is in custody.More >>
    A doctor told police that a patient fatally shot a caseworker at their hospital complex before the doctor pulled out his own gun and exchanged fire with him and wounded him, a prosecutor said Thursday night.More >>
  • As inmate died, lawyers debated if he was in pain

    As inmate died, lawyers debated if he was in pain

    Thursday, July 24 2014 11:25 PM EDT2014-07-25 03:25:49 GMT
    A condemned murderer took nearly two hours to die and gasped for about 90 minutes during an execution in Arizona that quickly rekindled the national debate on capital punishment in the U.S.More >>
    The nearly two-hour execution of a convicted murderer prompted a series of phone calls involving the governor's office, the prison director, lawyers and judges as the inmate gasped for more than 90 minutes.More >>
  • NYC official: Thieves got into 1K StubHub accounts

    NYC official: Thieves got into 1K StubHub accounts

    Thursday, July 24 2014 11:05 PM EDT2014-07-25 03:05:13 GMT
    A law enforcement official and online marketplace StubHub say cyber thieves got into more than 1,000 customers' accounts and fraudulently bought tickets for events.More >>
    Some of the hottest tickets in town - to Broadway hits, Jay-Z and Justin Timberlake concerts, a New York Yankees-Boston Red Sox game - were snapped up by an international ring of cyber thieves who commandeered more than...More >>
By JOSH BOAK
AP Economics Writer

WASHINGTON (AP) - Rising gasoline costs pushed up the prices U.S. companies receive for their goods and services in June, but overall inflation remains tame.

The Labor Department said Wednesday that the producer price index, which measures the cost of goods and services before they reach the consumer, rose 0.4 percent last month. The increase follows a 0.2 percent decrease in May.

Gas costs rose 6.4 percent in June. Steel prices shot up 3 percent. But prices fell for grains, cheese and rental cars to offset some of those increases.

In the past 12 months, producer prices have risen 1.9 percent, roughly in line with the Federal Reserve's inflation target of 2 percent.

But inflation appears unlikely to accelerate based on producer prices. Crude oil prices have fallen in July, after surging last month on reports of Iraq being destabilized by the Sunni militia known as the Islamic State of Iraq and the Levant.

"Nothing here is going to worry the Fed, particularly not when crude oil prices have most recently fallen back," said Paul Ashworth, chief US economist at Capital Economics.

Consumer prices have tended to track the costs for producers. They rose in May in response to food and energy costs increasing earlier in the year for wholesalers. Consumer prices rose 2.1 percent in May compared to the year prior.

Retailer and wholesaler profit margins increased 0.2 percent in June. Excluding the volatile food, energy and profit margin categories, core producer prices were up 0.2 percent last month.

The Fed targets inflation at about 2 percent as a guard against deflation, which can drag down wages and spark a recession. At the same time, the Fed wants to avoid excessive inflation and protect consumers and the purchasing power of the dollar.

Low inflation should provide a foundation for consumers to spend, but it also reflects the weak recovery from the Great Recession that is now entering its sixth year. Businesses are reluctant to raise their prices, if their customers lack the income to afford their goods and services.

Wage growth has been meager and unemployment, now at 6.1 percent, has been slow to recede since the recession. That has limited consumer spending, which accounts for about 70 percent of all economic activity.

Still, low inflation has enabled the Fed to pursue extraordinary measures to boost the economy. This includes holding shorter-term interest rates near zero and purchasing bonds to depress longer-term interest rates. It has begun to unwind some of those measures, cutting its monthly bond-buying program to $35 billion from $85 billion last year.

Those bond purchases had ensured low interest rates that encouraged investors to pour money into the economy.

Copyright 2014 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

Powered by WorldNow

341 Northern Blvd., Albany, NY 12204

Telephone: 518.436.4822
Fax: 518.426.4792
Email: news@news10.com

Can’t find something?
Powered by WorldNow
All content © Copyright 2000 - 2014 Young Broadcasting of Albany, Inc. A Media General Company.