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News > Economy
Wholesale prices edge up
Producer price index recovers after November's drop, but core prices fall again.
January 14, 2004: 8:59 AM EST

NEW YORK (CNN/Money) - U.S. wholesale prices rose in December, the government said Wednesday, driven mainly by higher food and energy prices.

The Labor Department said its producer price index (PPI), a measure of wholesale prices, rose 0.3 percent after falling 0.3 percent in November. The so-called core PPI, which excludes often volatile food and energy prices, fell 0.1 percent after dipping 0.1 percent in November.

Economists, on average, expected PPI to rise 0.2 percent and core PPI to rise 0.1 percent, according to

The report had little impact on U.S. stock market futures, which continued to point to a slightly higher opening on Wall Street. Treasury bond prices rose, pushing yields lower.

Department of Labor (DOL)
New York

Despite steady economic growth since the end of 2001, when the latest recession ended, and despite a blistering rate of growth in the third quarter, inflation has stayed low, according to many measures, enabling the Fed to keep interest rates low.

In early December, it left its key overnight lending rate at the lowest level since 1962, and officials have since promised to stay on hold for some time to come.

Low inflation is good news for consumers, but not always good news for companies, some of which are struggling to maintain pricing power on the retail level even as they see wholesale prices rise.

In December, energy prices jumped 1.8 percent, the Labor Department reported, after falling 1.2 percent in November. Gasoline prices rose 5.1 percent, following November's 4.8-percent drop. Food prices rose 0.2 percent after falling 0.3 percent in November.

Some observers worry that recent gains in the prices of commodities and gold, along with a falling dollar, are signs that higher inflation is in the pipeline. Though it hasn't yet impacted consumer prices, it certainly hit the prices of crude and intermediate goods, according to Wednesday's report.

Prices for crude goods such as timber and cotton rose 2 percent, after rising 0.2 percent in November. Prices for intermediate goods such as lumber and yarn rose 0.5 percent after falling 0.2 percent in November.

In 2003, finished goods prices rose 4 percent, compared with a 1.2-percent gain in 2002. Intermediate goods prices rose 3.9 percent, compared with 3.2 percent in 2002. And crude goods prices rose 18.5 percent, compared with 24.7 percent in 2002.  Top of page

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