Drought Drives Up Wholesale Prices

The summer drought that withered crops contributed to a 0.3 percent increase in wholesale prices in September, the first advance in four months and the largest in nearly a year.

Still, analysts attributed the big boost to transitory factors and predicted inflation will remain muted.

“Food prices reacted to the summer’s hot weather, but that probably is a temporary jump,” said economist Lynn Reaser of First Interstate Bancorp in Los Angeles. “Inflation is not totally dormant, but it is certainly subdued.”

The Labor Department said Thursday the seasonally adjusted jump in its Producer Price Index was the first since a 0.2 percent advance in May and the steepest since wholesale prices shot up 0.5 percent last January.

The index, which measures cost pressures before they reach the consumer level, had fallen 0.1 percent in August and 0.2 percent in June. It was unchanged in July.