Energy elevates producer prices
WASHINGTON — Rising energy costs led prices at the wholesale level to climb 0.4 percent in September — a bout of inflation that happened in the wake of Hurricane Harvey closing a critical number of U.S. gasoline producers.
The sharp rise is expected to be temporary as the effects of the hurricane fade.
The Labor Department said Thursday that its producer price index, which measures inflation pressures before they reach the consumer, has risen 2.6 percent over the past 12 months. September’s burst of inflation is likely the result of oil refineries shuttering along the Gulf of Mexico due to Harvey toward the end of August. Gasoline prices surged 10.9 percent in September.
The jump in producer prices is occurring after years of subdued inflation. The Federal Reserve targets a 2 percent yearly increase in consumer prices in order to encourage economic activity, but the U.S. central bank has persistently missed that target for the past five years. The Fed’s preferred measure of inflation has increased just 1.4 percent over the 12 months that ended in August.
“It will take more than one month of stronger gains in these inflation measures” to convince Fed officials that “inflation is coming back on a sustainable basis,” said Scott Anderson, chief economist at Bank of the West.
For producers, food costs were unchanged last month. Motor vehicle costs rose, while computer chips fell in price.
A less volatile measure of inflation, which excludes food, energy and trade services, rose 0.2 percent last month. That measure has increased 2.1 percent over the past year.
On Wall Street Thursday, stock indexes retreated from record highs as retailers and media companies declined and investors shrugged at reports from a few big banks.
Clothing companies and other retailers fell after women’s clothing company J. Jill slashed its thirdquarter forecast.
AT&T had its worst oneday loss since 2008 after it said lost more satellite and cable TV subscribers in the third quarter. Other cable and satellite TV companies also stumbled. Industrial companies and household goods makers finished higher.
JPMorgan Chase and Citigroup both did better than analysts expected in the third quarter, but their stocks fell, and so did shares of other banks.
Kevin Moe checks corn near Pasco, Wash. For producers, food costs were flat last month.