WASHINGTON (REUTERS) - US producer prices rose in September as the price of gasoline recorded its biggest increase in more than two years amid production disruptions at oil refineries in Texas caused by Hurricane Harvey.
The Labor Department said its producer price index for final demand increased 0.4 per cent last month after rising 0.2 per cent in August. In the 12 months through September, the PPI jumped 2.6 per cent. That was the biggest gain since February 2012 and followed a 2.4 per cent jump in August.
Wholesale gasoline prices soared 10.9 per cent in September after increasing 9.5 per cent in August. The increase was the largest since May 2015 and accounted for two-thirds of the 0.7 per cent rise in the price of goods. The Labor Department said higher energy prices were likely the result of "reduced refining capacity in the Gulf Coast area due to Hurricane Harvey." It said Harvey and Hurricane Irma, which devastated Florida, had "virtually" no impact on the collection of PPI data or survey response rates.
Economists had forecast the PPI gaining 0.4 per cent last month and accelerating 2.5 per cent from a year ago.
Harvey and Irma, which struck in late August and early September, caused the economy to shed jobs last month for the first time in seven years. The storms have also restrained consumer spending and undercut industrial production, homebuilding and home sales.
Last month's gasoline-driven surge in the PPI is likely to be temporary amid ample crude oil supplies.
A key gauge of underlying producer price pressures that excludes food, energy and trade services rose 0.2 per cent last month after a similar increase in August. The so-called core PPI increased 2.1 per cent in the 12 months through September after climbing 1.9 per cent in August.
Inflation has remained relatively low, with the main measure tracked by the Federal Reserve retreating further below the US central bank's 2 per cent target in August. Price pressures remain benign despite the labour market nearing full employment.
Last month, food prices were unchanged after falling 1.3 per cent in August. Core goods gained 0.3 per cent after rising 0.2 per cent in the prior month.
The cost of services increased 0.4 per cent, driven by a rise in margins for final demand trade services, a measurement of changes in margins received by wholesalers and retailers. Services edged up 0.1 per cent in August.
The cost of healthcare services was unchanged after advancing 0.3 per cent in August. Those costs feed into the Fed's preferred inflation measure, the personal consumption expenditures (PCE) price index excluding food and energy.