U.S. producer prices advance, but inflation still tame

Wed Jan 15, 2014 2:35pm EST
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By Lucia Mutikani

WASHINGTON (Reuters) - U.S. producer prices recorded their largest gain in six months in December as the cost of gasoline rebounded strongly, but there were few signs of any sustained price pressures.

The Labor Department said on Wednesday its seasonally adjusted producer price index rose 0.4 percent last month, the biggest rise since June, after slipping 0.1 percent in November.

Even with the latest rise, however, prices at the wholesale level were up only 1.2 percent from a year-ago, suggesting a continued lack of pressure on the prices consumers pay.

"We are still seeing very subdued inflation pressures. The type of economic growth we see in 2014 is likely to lead to a slow normalization in consumer prices, not a fast one," said Laura Rosner, an economist at BNP Paribas in New York.

December's rise in prices received by the nation's farms, factories and refineries ended two straight months of declines and matched economists' expectations.

Wholesale prices excluding volatile food and energy costs increased 0.3 percent, the biggest gain since July 2012, after ticking up 0.1 percent the prior month.

However, tobacco accounted for nearly half the increase. Wholesale tobacco prices typically rise in December.

Over the past 12 months, the core price index was up just 1.4 percent.   Continued...

A combine drives over stalks of soft red winter wheat during the harvest on a farm in Dixon, Illinois, July 16, 2013. REUTERS/Jim Young