WASHINGTON – A big gain in the cost of food pushed U.S. wholesale prices (search) up at a faster-than-expected pace last month, but prices were well contained outside that volatile area, a government report showed on Friday.
The Producer Price Index (search), which measures prices paid to farms, factories and refineries, rose 0.3 percent in September, the Labor Department (search) said. Wall Street economists had expected the price gauge to hold steady.
A 1.2 percent jump in food prices, which reflected a more than 20 percent rise in the cost of vegetables, lay behind the unexpectedly large wholesale price gain.
Stripping out the food price advance, and a mild 0.1 percent increase in energy costs, wholesale prices were unchanged last month. Private economists had expected the so-called core PPI (search) to edge up 0.1 percent.
The core index has risen just 0.1 percent over the last 12 months, suggesting an absence of price pressures. Very tame consumer and producer prices had fanned deflation fears earlier in the year but these have eased as the recovery has accelerated.
Over the last quarter, however, core producer prices rose at a 1.3 percent annual rate, marking a turnaround from the 2.4 percent drop in the three months through June.
Further back in the production pipeline, the report showed intermediate goods prices largely under wraps. They fell 0.1 percent overall and were up just 0.1 percent excluding food and energy.
But crude goods prices, which are often volatile, rose 3.4 percent, with the core crude index up 2.3 percent.