Wholesale Prices Rise 0.1 Percent as Inflation Shows Signs of Slowing

Prices at the wholesale level edged up modestly in August, providing further evidence that inflation pressures are easing.

The Labor Department reported that wholesale prices edged up 0.1 percent last month as gasoline prices fell, helping to offset a jump in food costs.

Outside of energy and food, core inflation was even better behaved, falling by 0.4 percent after a 0.3 percent decline in July. It marked the first back-to-back declines in core inflation in more than three years.

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The good news contained in the department's Producer Price Index followed a report last week that inflation at the consumer level also moderated in August, rising by just 0.2 percent.

Both months reflected a slowdown in energy prices, which rose by just 0.3 percent at the wholesale level in August after a huge 1.3 percent jump in July. Gasoline prices actually fell at the wholesale level last month, dropping 2.2 percent, the biggest decline in seven months.

With surveys showing further gasoline price declines in recent weeks, analysts were looking for more good news on inflation in the September price reports.

Falling gasoline prices will leave consumers with more money to spend on other items. This should provide fuel to keep the economy moving ahead, easing worries that the recent slowdown in consumer spending could worsen into an outright recession.

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