Wholesale prices increase 0.2% in August, matching predictions

Sept. 12 (UPI) -- Wholesale prices for goods around the country in August grew 0.2% in August, matching Wall Street expectations a week before the Federal Reserve is planning to meet on interest rates, but it is still running hotter in the core index, the Labor Department said on Thursday.

The good news for stock market watchers hoping for an interest rate cut next week was the producer price index not only matched Dow Jones economist predictions , but the inflation rate over the past 12 montxhs was 1.7%, striking at 0.3% under the Fed's benchmark in months.

The bad news came in the core PPI index, which excludes food and energy prices. The PPI core index increased to 0.3% for August and 3.3% for the past 12 months. While many experts believe the PPI core index will not stop the Fed from lowering interest rates next week, it may influence the board to go smaller on their cut.

"The August rise in the index for final demand can be traced to a 0.4% increase in prices for final demand services," the Labor Department report said. "The index for final demand goods was unchanged."

The report said nearly 60% of the final demand services increase came from sectors minus trade, transportation and warehousing. Trade services, for example, was up 0.6%. The final demand for transportation and warehousing services dropped 0.1%.

The index saw some of its biggest jumps in shelter with guestroom rental prices leaping 4.8% in August, over the final days of summer vacation. Airline passenger services, however, dropped 0.8%.

Prices for goods did not change after jumping 0.6% in July. Energy prices helped in that category, tumbling 0.9% in August while the prices for chicken eggs, gasoline, diesel fuel, and drugs and pharmaceuticals all increased.