December wholesale prices up 0.3% with sharp jump in energy

In this Dec. 12, 2019, file photo workers process chickens at the Lincoln Premium Poultry plant, Costco Wholesale's dedicated poultry supplier, in Fremont, Neb. U.S. wholesale prices rose 0.3% in August 2020, just half the July gain, as food and energy prices decline. The Labor Department said Thursday, Sept. 10 that the August advance in the producer price index — which measures inflation before it reaches consumers — followed a 0.6% surge in June which was the biggest monthly gain since October 2018. (AP Photo/Nati Harnik, File)

In this April 29, 2020 file photo, amid concerns of the spread of COVID-19, a shopper wears a mask as she looks over meat products at a grocery store in Dallas. U.S. wholesale prices rose 0.3% in December led by a the biggest jump in energy costs since June. The Labor Department reported Friday, Jan. 15, 2021 that the gain in its producer price index, which measures inflation pressures before they reach consumers, followed a modest 0.1% gain in November and matched the 0.3% rise in October.(AP Photo/LM Otero, File)

WASHINGTON (AP) — U.S. wholesale prices rose 0.3% in December led by a the biggest jump in energy costs since June.

The Labor Department reported Friday that the gain in its producer price index, which measures inflation pressures before they reach consumers, followed a modest 0.1% gain in November and matched the 0.3% rise in October.

The December increase reflected a 5.5% surge in energy costs, the biggest gain since a 9.6% jump in June. That offset a 0.1% drop in food costs, the first decline since August.

Gasoline prices rose 16.1% in December and accounted for nearly half of the increase in goods prices last month.

Over the past 12 months, inflation at the wholesale level has risen a modest 0.8%. The government reported Wednesday that consumer inflation was also well-behaved last year, rising just 1.4% over the past 12 months.

These low inflation reading are giving the Federal Reserve room to keep interest rates at ultra-low levels in an effort to help lift the economy out of a pandemic-induced recession. Inflation has remained below the Fed’s 2% annual target for much of the past decade.

“Inflation is still largely a no-show,” said Mahir Rasheed, an economist with Oxford Economics. “While some sectors have seen prices start to heat up, broader inflation measures continue to fall short of the Fed's 2% goalpost as the economy entered the new year in a slump.”