U.S. wholesale prices increases accelerated in August, a sign that inflation remains stubbornly persistent despite a series of sharp interest rate hikes by the Federal Reserve.
The Labor Department said Thursday that its producer price index — which measures inflation before it hits consumers — increased 1.6% last month from a year earlier. That is up from a small 0.8% yearly increase in July and just 0.1% in June. Sharply higher gas prices drove much of the increase.
Wholesale prices are still rising more slowly than consumer costs, a sign that inflation may continue to cool as the weaker wholesale price gains translate into smaller price increases for the consumer. The Thursday data reflect prices charged by manufacturers, farmers and wholesalers. , up from a 3.2% yearly gain in July. Yet excluding the volatile energy and food components, core inflation fell to 4.3% in August from 4.7% in July., largely because sharply higher gas prices pushed up gas station sales. Excluding fuel, retail sales rose just 0.2%.
For now, consumer inflation remains far above the Fed's 2% target, and the pickup in wholesale prices last month underscores that further declines in inflation will likely be bumpy and uneven.
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