BUSINESS

Rising energy costs push US wholesale prices up 0.3 pct. in August; yearly inflation mild

09/13/2013 08:43 EDT | Updated 11/13/2013 05:12 EST
WASHINGTON - Higher energy costs pushed U.S. wholesale prices up 0.3 per cent last month. Prices rose a modest 1.4 per cent over the past year, the lowest one-year gain since April.

Excluding volatile food and energy costs wholesale prices were unchanged in August, the Labor Department said Friday. They were up 1.1 per cent over the past year, smallest gain since June 2010 and another sign that inflation remains under control.

Energy prices climbed in late August as tensions rose over Syria, accounting for two-thirds of the monthly increase in wholesale prices. More expensive vegetables and chicken lifted food prices 0.6 per cent in August from July.

The Federal Reserve, which meets next week, closely monitors wholesale and consumer prices, determined to keep inflation running at around 2 per cent.

Consumer prices in July were up just 2 per cent over the previous year. Core consumer prices have increased 1.7 per cent in the past 12 months.

A weak economy has contained inflation. Companies can't raise prices because demand for their products isn't strong enough.

The Fed's policymaking committee is expected to decide next week whether to scale back an $85 billion-a-month bond-buying program that is meant stimulate the economy by pushing down long-term interest rates and encouraging borrowing and spending. Some committee members believe the economy has gained enough momentum to justify reducing the purchases though not ending them.

But Charles Evans, president of the Federal Reserve Bank of Chicago, has said that he wants to see more data showing economic strength and more evidence that ultra-low inflation is only temporary.