Wholesale Prices Climb 0.3 Percent

Food and energy costs misbehaved in August but other wholesale prices actually declined, raising hopes on financial markets that the Federal Reserve may hold off raising interest rates.

The Labor Department reported Thursday that its Producer Price Index, which measures price pressures before they reach the consumer, was up 0.3 percent in August, the biggest gain in five months.

That reflected a big jump in energy prices, which had been falling for three months, and a gain in food costs spurred by a big jump in beef and pork prices.

Outside of food and energy, prices actually fell by 0.1 percent in August. It was the first decline in the so-called core rate since March.

For the year as a whole, the PPI has been rising at an annual rate of 2.1 percent, little changed from last year’s 2.2 percent increase. Through August the core rate has been rising at an annual rate of just 0.6 percent.

“Except for the period of the cigarette price wars in 1993, this is the lowest core wholesale rate ever measured,” said Bruce Steinberg, senior economist at Merrill Lynch in New York. “Despite continuing inflation fears, broad inflation indicators remain totally benign.”