WASHINGTON — The prices charged by U.S. manufacturers, farmers and other producers were unchanged in August, the latest evidence that inflation is tame.
The Labor Department said Friday the producer price index, which measures price changes before they reach the consumer, was flat after a 0.2 percent increase in July. Excluding the volatile food and energy categories, core prices rose 0.3 percent last month.
In the past year, wholesale prices have actually fallen 0.8 percent, the seventh straight 12-month decline. Core prices have risen just 0.9 percent during that time.
With oil and gas prices falling and most other costs little changed, American consumers are enjoying mild inflation. The dollar has risen about 15 percent in value in the past year, which makes imports cheaper.
Yet tepid price increases pose a dilemma for the Federal Reserve. It wants to see inflation closer to its 2 percent target before raising interest rates, potentially as soon as its meeting next week.
The Fed targets 2 percent inflation as a cushion against falling prices, or deflation, which can drag down wages and is hard to counteract.
Wholesale gas prices fell 7.7 percent in August, the government said, the biggest drop since January. Home heating oil prices fell 11 percent. The cost of airline tickets and pickup trucks also fell.
A gallon of gas cost an average $2.37 on Thursday, 22 cents cheaper than a month earlier and down by $1.06 in the past year.
But there are also some signs of rising costs. In the past three months core prices have increased at a 3.4 percent annual rate, compared with a 1.8 percent decline in the preceding three months. Much of that increase has been driven by rising profit margins at retailers and wholesalers.
