U.S. wholesale prices rise 0.1% in August; energy costs tumble

WASHINGTON — U.S. wholesale prices edged up 0.1% in August as energy prices took a big plunge, a further sign that inflation is remaining tame.

The Labor Department said Wednesday that the gain in its producer price index, which measures inflation pressures before they reach the consumer, followed a modest 0.2% rise in July. Core inflation, which excludes food and energy, rose a stronger 0.3%.

After bigger gains in April and May, driven by a surge in energy costs, wholesale inflation has returned in the past four months to the tiny increases seen during much of this record-long economic expansion, now in its 11th year.

Given the low inflation, the Federal Reserve is expected to cut its key interest rate for a second time this year at its meeting next week.

Over the past 12 months, wholesale prices have risen 1.8% while core wholesale prices are up 2.3%.

In a tweet Wednesday, President Donald Trump kept up his attacks on the Fed, saying the country is missing out economically because “Boneheads” at the central bank won’t lower interest rates fast enough.

When it reduced rates in July, the Fed said that it was doing so because of the uncertainties generated by Trump’s trade policies, slower global growth and the failure of inflation to rise to the central bank’s 2% target.

The report on wholesale prices showed that energy costs fell a sharp 2.5% in Au

gust and food costs were down 0.6%.

While overall inflation pressures remained modest, some categories did show big increases.

Hotel room rentals jumped 6.4%, a record amount, and insurance and gambling receipts also climbed by record amounts.

The data also showed the costs of arranging freight and cargo shipments surged 4.8% from July, a record in data back to 2009 and likely reflecting the effect on supply chains from tariffs.

The U.S.-China trade war escalated in August, as the administration announced tariffs on an additional batch of Chinese goods.

Producer prices excluding food, energy and trade services — a measure preferred by economists because it strips out the most volatile components — rose 0.4% from the previous month, the most since April. They climbed 1.9% from a year earlier after a 1.7% annual increase in July that was the smallest since January 2017.