Wholesale inflation rises; labor market struggles

Thu Sep 13, 2012 9:54am EDT
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By Lucia Mutikani

WASHINGTON (Reuters) - Producer prices rose by the most in three years in August as the cost of energy surged, but underlying inflation pressures were contained, keeping the door open to additional monetary policy easing.

Other data on Thursday underscored the weakness in the labor market, a major concern for the Federal Reserve, with the number of Americans filing new claims for jobless benefits rising to a two-month high, although some of the gain was attributed to Tropical Storm Isaac.

The Labor Department said its seasonally adjusted producer price index increased 1.7 percent last month, the largest gain since June 2009 and accelerating from July's 0.3 percent rise.

Economists polled by Reuters had expected prices at farms, factories and refineries to rise 1.1 percent last month.

Wholesale prices excluding volatile food and energy costs rose 0.2 percent, slowing from a 0.4 percent increase in July. The rise matched economists' expectations.

In a second report, the department said initial claims for state unemployment benefits rose 15,000 to a seasonally adjusted 382,000. Economists polled by Reuters had forecast claims rising to 370,000 last week.

A Labor Department official said Tropical Storm Isaac, which drenched parts of the country, accounted for about 9,000 of the claims filed last week. The number is not adjusted to take normal seasonal patterns into consideration.

The reports came as officials from the U.S. central bank were meeting for a second day to deliberate on policy.   Continued...

Michael Lipsitz does his grocery shopping at the WalMart in Crossville, Tennessee March 21, 2008. REUTERS/Brian Snyder