(HorizonPost.com) – The increase in wholesale prices accelerated in August, indicating that inflation remains persistent despite the Federal Reserve’s interest rate hikes, the Associated Press reported.
According to the Labor Department, the producer price index, which measures inflation before it impacts consumers, increased by 1.6 percent in August compared to last year, driven primarily by a sharp rise in gas prices last month.
This is a sharper increase compared to July when the PPI only rose 0.8 percent year-over-year and June when it rose only 0.1 percent.
Core inflation, which excludes the volatile food and energy categories, rose 2.2 percent in August from the previous year, down from the 2.4 percent year-over-year increase in July.
However, wholesale prices continue to rise at a slower rate than consumer costs, which could indicate that inflation may keep cooling since weaker wholesale price increases result in smaller price increases for consumers.
Last Wednesday, the Labor Department reported that the consumer price index rose 3.7 percent in August year-over-year, up from the 3.2 percent increase in July. However, omitting the food and energy categories, core inflation fell from 4.7 percent in July to 4.3 percent in August.
Additionally, retail sales increased 0.6 percent in August, largely due to the sharp increase in gas prices. Excluding fuel, retail sales increased only 0.2 percent.
Month-to-month, wholesale prices in August rose 0.7 percent, up from a 0.4 percent increase in July, marking the biggest month-to-month gain in over a year.
Meanwhile, core wholesale prices month-to-month increased 0.2 percent in August, down from a 0.3 percent increase in July. The Federal Reserve closely monitors core prices which are considered a more accurate measure of future inflation trends.
Currently, consumer inflation remains above the Federal Reserve’s target of 2 percent, and the increase in August wholesale prices indicates further inflation declines will be uneven.
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