WASHINGTON – U.S. wholesale prices rose at the fastest pace in five months in November, pushed higher by retailers' profit margins and more expensive food.
The Labor Department said Wednesday the producer price index, which measures price changes before they reach the consumer, rose 0.4 percent last month. The index is up 1.3 percent in the past year, the most in two years. That is still a low figure historically and suggests overall inflation remains tame.
Excluding volatile food and energy prices, wholesale prices rose 0.4 percent last month and 1.6 percent in the past year.
November's jump was mostly caused by a big increase in services prices, specifically profit margins for clothing stores, gas stations, jewelry and shoe stores. Food prices increased 0.6 percent, pushed higher by more expensive fruits and melons.
Energy costs fell 0.3 percent, as wholesale gasoline costs dropped 2.9 percent. That suggests gas costs could dip in the coming weeks. But oil prices have jumped in the wake of a deal to restrain production by oil-producing nations, making any relief at the pump likely to be short-lived.
The report adds to recent signs that inflation is firming a bit as Americans pay more for housing and medical care. Consumer prices, which are measured separately, rose 1.6 percent in October from a year earlier.
That is below the Federal Reserve's target of 2 percent, but still the largest gain since October 2014. Consumer inflation, excluding food and energy, is up 2.1 percent in the past year.
Signs of slightly higher inflation are one reason the Federal Reserve is widely expected to raise its benchmark short-term interest rate on Wednesday for the first time in a year. Economists and investors forecast an increase to a range of 0.5 percent to 0.75 percent, one-quarter of a percentage point higher than the previous range.
The Fed first raised rates a year ago, after pegging them near zero for seven years in an effort to boost borrowing, spending and investment.