Wholesale costs in the U.S. rose in July at their fastest rate in six months, pushed up by higher tobacco prices, light truck costs, and pharmaceuticals (NYSE:XLV).
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The Producer Price Index advanced 0.2% in July, following a 0.4% decline in June, according to the Labor Department’s report Wednesday. The core measure, which excludes volatile food (NYSE:RJA) and energy (NYSE:XLE), increased 0.4% in July, the highest rate of increase since January. Economists had forecast that the seasonally adjusted index for prices paid at the farm and factory would advance 0.1% in July, according to a median estimate of forecasts ranging from a 0.5% decline to a 0.6% increase.
According to the report, the cost of crude goods dropped in July for the third straight month, down 1.2%, with petroleum and food (NYSE:RJA) prices also declining off highs. Tobacco accounted for almost one fourth of the rise in the core PPI rate, climbing 2.8%, while light truck prices increase 1%, pharmaceuticals (NYSE:XLV) climbed 0.4%, and food costs rose 0.6%, in large part due to potato prices, which made their biggest advance in almost a year. Fuel (NYSE:UGA) costs fell 0.6%, led by gasoline prices, which rose 2.8%.
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In the last twelve months, the PPI has risen 7.2%, which means that, when compared to July 2010, companies spent 7.2% more on goods last month. Core wholesale prices, which exclude volatile food and energy costs, were projected to rise 0.2% rather than the 0.4% they gained, and have now climbed 2.5% in the last twelve months, the biggest year-over-year increase since June 2009.
Producer prices are one of three monthly inflation gauges reported by the Labor Department — the other two are prices of goods imported to the U.S., which rose 0.3% in July according to a data release yesterday, and consumer prices, which rose 0.2% in July.