U.S. producer prices increase as Harvey boosts gasoline
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[October 12, 2017]
WASHINGTON (Reuters) - U.S.
producer prices rose in September as the price of gasoline recorded its
biggest increase in more than two years amid production disruptions at
oil refineries in Texas caused by Hurricane Harvey.
The Labor Department said its producer price index for final demand
increased 0.4 percent last month after rising 0.2 percent in August. In
the 12 months through September, the PPI jumped 2.6 percent. That was
the biggest gain since February 2012 and followed a 2.4 percent jump in
Wholesale gasoline prices soared 10.9 percent in September after
increasing 9.5 percent in August. The increase was the largest since May
2015 and accounted for two-thirds of the 0.7 percent rise in the price
of goods. The Labor Department said higher energy prices were likely the
result of "reduced refining capacity in the Gulf Coast area due to
It said Harvey and Hurricane Irma, which devastated Florida, had
"virtually" no impact on the collection of PPI data or survey response
Economists had forecast the PPI gaining 0.4 percent last month and
accelerating 2.5 percent from a year ago.
Harvey and Irma, which struck in late August and early September, caused
the economy to shed jobs last month for the first time in seven years.
The storms have also restrained consumer spending and undercut
industrial production, homebuilding and home sales.
Last month's gasoline-driven surge in the PPI is likely to be temporary
amid ample crude oil supplies.
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Customers shop at a Whole Foods store in New York City, U.S., August
28, 2017. REUTERS/Brendan McDermid/File Photo
A key gauge of underlying producer price pressures that excludes food,
energy and trade services rose 0.2 percent last month after a similar
increase in August. The so-called core PPI increased 2.1 percent in the
12 months through September after climbing 1.9 percent in August.
Inflation has remained relatively low, with the main measure tracked by
the Federal Reserve retreating further below the U.S. central bank's 2
percent target in August. Price pressures remain benign despite the
labor market nearing full employment.
Last month, food prices were unchanged after falling 1.3 percent in August. Core
goods gained 0.3 percent after rising 0.2 percent in the prior month.
The cost of services increased 0.4 percent, driven by a rise in margins for
final demand trade services, a measurement of changes in margins received by
wholesalers and retailers. Services edged up 0.1 percent in August.
The cost of healthcare services was unchanged after advancing 0.3 percent in
August. Those costs feed into the Fed's preferred inflation measure, the
personal consumption expenditures (PCE) price index excluding food and energy.
(Reporting by Lucia Mutikani; Editing by Paul Simao)
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