Cheaper gas drives down US wholesale price index

Print
Font Size:
Default font size
Larger font size

Posted: Thursday, December 13, 2012 9:25 am

WASHINGTON (AP) -- Cheaper gas drove down a measure of wholesale prices in November for the second straight month, a sign inflation remains in check.

The producer price index fell 0.8 percent last month, the steepest drop since May, the Labor Department said Thursday. That follows a 0.2 percent decline in October. The index measures the cost of goods before they reach the consumer.

Gas prices fell last month by the most in more than three years. Food prices, however, rose by the most in nearly two years, pushed higher by costlier beef and vegetables.

In the past year, wholesale prices have increased 1.5 percent. That's the lowest annual pace in four months.

Excluding volatile food and gas, core producer prices ticked up 0.1 percent in November and 2.2 percent in the past year.

Gas prices had risen sharply over the summer, pushing up both the producer and consumer price indexes. But since then, the cost of gasoline, home heating oil and natural gas has fallen back.

Nationwide, a cost of a gallon of gasoline fell to $3.32 Wednesday, according to AAA, down 13 cents in the past month and nearly 50 cents since mid-October.

Low inflation means consumers have more money to spend, which helps the economy. It also gives the Federal Reserve more room to keep interest rates low in an effort to spur economic growth. If prices were to begin rising rapidly, the central bank might be forced to raise rates in response.

The Fed said Wednesday that it now plans to keep the short-term interest rate it controls at nearly zero until the unemployment rate falls to at least 6.5 percent and inflation isn't expected to top 2.5 percent in the next two years.

In a statement, Fed policymakers said that they expect "inflation over the medium term will likely run at or below its 2 percent objective."

© 2012 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed. Learn more about our Privacy Policy and Terms of Use.

Rules of Conduct

  • 1 Keep it Clean. Please avoid obscene, vulgar, lewd, racist or sexually-oriented language.
  • 2 Don't Threaten or Abuse. Threats of harming another person will not be tolerated. AND PLEASE TURN OFF CAPS LOCK.
  • 3 Be Truthful. Don't knowingly lie about anyone or anything.
  • 4 Be Nice. No racism, sexism or any sort of -ism that is degrading to another person.
  • 5 Be Proactive. Use the 'Report' link on each comment to let us know of abusive posts.
  • 6 Share with Us. We'd love to hear eyewitness accounts, the history behind an article.

Welcome to the discussion.

Right Now

weather

Today

weather
76°
Details

Tomorrow

weather
76°
Details

Today

weather
78°
Details

Today

weather
76°
Details

SUBMIT PHOTOS & VIDEOS | VIEW ALL PHOTOS & VIDEOS

Send your photos & videos to Pix@MySuncoast.com and you could be featured on ABC 7 & our website.