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And natural gas prices dropped sharply last month and have declined nearly 10 percent in the past year. That offset some of the increase in gas costs. Mild winter weather has cut demand, at the same time that supplies have risen as companies extract more natural gas from shale rock. But other items cost more. Consumers paid more for prescription drugs, hotel rooms, and new cars. Rental costs rose 0.2 percent for the fourth straight month. A separate report from the Labor Department showed that average hourly pay, adjusted for inflation, fell 1.1 percent in the 12 months ended in February. A report Wednesday indicated that inflation pressures also aren't increasing much at the wholesale level. The producer price index, which measures price changes before they reach the consumer, rose 0.4 percent. The gain was largely because of higher gas prices. Excluding food and gas, core wholesale prices rose just 0.2 percent A small amount of inflation can be good for the economy. It encourages businesses and consumers to spend and invest money sooner rather than later, before inflation erodes its value. Lower price growth also leaves more money in consumers' pockets, boosting their buying power and supporting economic growth. The jump in gas and food prices early last year limited Americans' ability to buy other goods, slowing the economy.
[Associated
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