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Wholesale prices rise on higher gas costs

WASHINGTON — Wholesale prices rose in October for the fourth straight month as the cost of gas increased by the most since January.

The Labor Department said Tuesday that the Producer Price Index rose 0.4 percent last month, the same increase as September and August. Wall Street analysts had expected a larger increase. The index is up by 4.3 percent in the past 12 months.

Still, there was little sign of inflation in the report. Food prices fell slightly, confounding economists’ expectations that they would rise due to higher costs for grains and other commodities.

Excluding the volatile food and energy categories, the so-called core index fell by 0.6 percent, the most in more than four years.

The drop was driven by lower prices for new cars and pickup trucks. The department incorporates the price impact of the new model cars that automakers introduce each year in the October index. New car prices rose last month, but by less than in previous years. Under the department’s seasonal adjustment process, that translates into a lower price.

Car prices fell by a seasonally adjusted 3 percent, the department said, and pickup truck prices fell by 4.3 percent. Both were the biggest drops in about four years.

Consumers responded by purchasing cars at the healthiest pace since the Cash for Clunkers program in August 2009. Sales at auto dealerships rose by 5 percent in October, the Commerce Department said Monday.

Grain prices rose last month, the department said, but food companies aren’t yet passing on the price increases to consumers. Corn prices rose 22.7 percent and soybeans were up 10.9 percent. But beef and veal costs, which can rise when feed grains are more expensive, fell by 5.8 percent, the Labor Department said.

With unemployment high and the economy weak, retailers won’t risk chasing away frugal shoppers by raising prices.

Gas prices rose by 9.8 percent, the most since January. The cost of diesel and home heating oil also rose.