WASHINGTON (AP) — Rising oil and gas costs likely pushed up wholesale prices last month, though overall inflation is expected to remain tame.
Economists forecast that the producer price index moved up 0.4 percent in January, according to a survey by FactSet, a provider of financial data services. The index measures price changes before they reach the consumer. It dipped 0.1 percent in December because of sharp drops in food and energy costs.
The "core" index, which excludes volatile food and energy prices, is expected to have risen 0.1 percent in January, after a bigger gain of 0.3 percent in December.
The report will be issued by the Labor Department at 8:30 a.m. Eastern time Thursday.
Modest increases in wholesale inflation reduce the pressure on manufacturers and retailers to raise prices for consumers. That helps keep consumer prices in check. It also helps manufacturers maintain their profit margins.
Wholesale price inflation peaked last year and has moderated steadily in recent months. Many agricultural commodities, such as cotton and corn, spiked in price early last year but have since fallen.
Oil prices, however, have ticked up, pushing up gas prices. That is partly offset by falling costs for other sources of energy, such as natural gas.
Gas prices averaged $3.52 per gallon Wednesday, according to AAA. That's up about 13 cents in the past month.
Producer prices rose 4.8 percent in December compared to a year earlier. That's down from a recent year-over-year peak of 7.1 percent, reached in July, and will likely fall further if economists' forecasts for January's gains are correct.
Low inflation makes it easier for the Federal Reserve to keep the short-term interest rate it controls at a record-low level of nearly zero. If there were signs that inflation was increasing rapidly, the Fed would likely raise rates.
The central bank is forecasting that consumer price inflation will remain in check this year. It expects that the inflation gauge it follows will increase by about 1.6 percent in 2012. That's below the Fed's target for inflation of 2 percent.
Fed Chairman Ben Bernanke announced that target, the first ever for the central bank, last month.
A small amount of inflation can be good for the economy. It encourages businesses and consumers to spend and invest money sooner rather than later, before inflation erodes its value.
Lower price growth also leaves more money in consumers' pockets, boosting their buying power. That would support more economic growth. The jump in gas and food prices early last year limited the ability of consumers to buy other goods, slowing the economy.
Some economists worry that rising gas prices could act in a similar way again, dragging on growth. If turmoil worsened in the Middle East, for example, that could push oil and gas prices much higher.
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