WASHINGTON (AP) — Wholesale prices likely increased in November by the most in eight months due to rising costs for food, energy and vehicles.
Economists forecast that the Producer Price Index, which measures price changes before they reach the consumer, rose 0.6 percent last month, according to a survey by Thomson Reuters. The index has increased 0.4 percent for the past three months.
But that increase is unlikely to raise concerns about inflation. Outside of the volatile food and energy categories, the so-called “core” index is projected to rise only 0.2 percent.
The Labor Department will issue the report Tuesday at 8:30 a.m. Eastern.
The weak economy is limiting the ability of many companies to raise prices. High unemployment is keeping paychecks low, so consumers can’t afford to spend much more.
In October, core producer prices dropped 0.6 percent, the steepest fall in more than four years. That was due to a sharp fall in the cost of new cars and pickup trucks. The figure was pushed lower due to the introduction of new model cars and trucks. When car companies add new features to the new models without significantly raising prices, it shows up as a price drop under the department’s calculations.
Car and truck prices are expected to bounce back in the November wholesale prices report. Energy prices also jumped last month, mostly because of higher gasoline and natural gas costs.
With prices largely in check, the Federal Reserve has launched a program to purchase $600 billion in government bonds over the next 8 months in an effort to lower longer-term interest rates. Critics have charged that effort could lead to high inflation, as the central bank pumps more money into the economy.
But the Fed is more worried about deflation, a widespread drop in prices and wages, than inflation. When it announced the program, the Fed said “measures of underlying inflation are somewhat low” compared to levels it considers consistent with stable prices.