Gas price jump boosts U.S. producer prices

Prices charged by U.S. producers rose in June at the fastest pace in 13 months, reflecting a big jump in the price of gasoline and other energy products.

The Labor Department says its producer price index, which measures cost pressures before they reach the consumer, increased 0.5% in June. That was the largest one-month jump since a similar rise in May 2015.

Energy prices were up 4.1% last month, while food costs rose 0.9%.

Core inflation, which excludes volatile food and energy, rose 0.4% in June, the biggest uptick since January. Even with the June acceleration, producer prices are up just 0.3% over the past 12 months, while core inflation is up a moderate 1.3%.

Those increases are similar to the moderate inflation being registered at the consumer level. A gauge of consumer prices preferred by the Federal Reserve has stayed below the Fed’s 2% target for more than four years. The central bank boosted a key interest rate by a quarter point in December and signaled that it planned to raise rates another four times this year.

But a weak start for the U.S. economy this year and financial market turbulence has so far kept the Federal Reserve on the sidelines. With inflation still at low levels, analysts believe the Fed will leave rates unchanged for a fifth time this year when officials next meet at the end of this month.

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Many analysts also predict the Fed will raise rates only once or twice this year, with the first rate increase not coming until September at the earliest.

For June, the 4.1% rise in energy costs reflected a 9.9% jump in the price of gasoline, the biggest increase since a 17.7% rise in May 2015.

The 0.9% increase in food costs was the largest since a similar rise in January. The price of corn rose 10.7% in June, the sharpest jump since August 2012, while meat prices were up 4%.

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Staff, with files from The Associated Press

The Associated Press is an American not-for-profit news agency headquartered in New York City.