WASHINGTON (AFP) - A bump in fuel prices helped nudge US wholesale prices higher in August, to their biggest gain in four months, the Labor Department reported Wednesday (Sept 14).
But despite reversing the drop seen in July, the Producer Price Index still fell short of analyst expectations. Although the fuel price index spiked last month, it was not affected by Hurricane Harvey, since the information used to calculate it was collected before the storm hit.
Harvey made landfall toward the end of the month on the Texas Gulf Coast, shutting down a large share of US production and refining capacity, which hit fuel and crude prices.
But even so, weak US inflation has stumped monetary policymakers and economists this year. The Federal Reserve is expected to leave its benchmark interest rate untouched when the meet next week, and the likelihood of a third rate hike this year has receded.
Total PPI, which tracks the costs of wholesale goods and services, rose 0.2 per cent for the month, the Labor Department said, falling short of the 0.3 per cent rise analysts had been expecting.
The increase followed a 0.1 per cent drop in the prior month, and was the largest since a gain of 0.5 per cent in April. Year-over-year, the index was 2.4 per cent higher, up five tenths from July.
Most of the August PPI increase came from the goods segment, including energy which jumped 3.3 per cent.
Excluding the volatile food and fuel categories, PPI rose 0.1 per cent, below expectations, and was up 2.0 per cent compared to August 2016.
Within energy, there was a double-digit monthly increases in residual fuels, home heating oil, and jet fuel, which rose 18.6 per cent, its fastest pace in eight years.
And wholesale gasoline prices rose 9.5 per cent for the month, the biggest increase since January.
In contrast, food prices dragged the monthly index down, with wholesale wheat prices tumbling 20.6 per cent, the largest drop in more than nine years.
Air transportation services rose 1.4 per cent, the biggest increase since July 2009, while truck hauling services moved up 0.9 per cent, the largest increase in three years.