High gas prices contribute to US wholesale price hike

Gasoline pumps are wrapped in plastic ahead of the arrival of Hurricane Irma September 9, 2017 in Fort Lauderdale, Florida. (AFP)

US producer prices increased in August, manly driven by a jump in the cost of gasoline and there were also signs of a pickup in underlying producer inflation.  

About three-fourths of the monthly gain came from goods, most of which was due to a 9.5 percent hike in gasoline prices, along with the biggest rise in jet-fuel costs since 2009, the Labor Department said on Wednesday.

Excluding the volatile categories of food, energy and trade services, producer costs rose 0.2 percent from the previous month.

Energy prices rose 3.3 percent from the prior month, the most since January.

Absent clear signs of substantial rising inflation, the Federal Reserve can afford to be patient before raising interest rates again.

Most analysts do not think the Fed will increase the cost of borrowing again at least until the end of the year.

Still, the Fed will have to pay close attention to the effect of gas on overall inflation. The price of fuel could remain elevated for awhile after all the damage caused to refining operations in the Houston area after Hurricane Harvey.

Hurricane Irma which has caused widespread fuel shortages in Florida, could keep pressure on fuel costs nationwide as supplies are rushed to the storm-battered state.