Wholesale Costs Increased More Than Expected in July

The 0.2 percent advance in the producer price index followed a 0.4 percent decline in June, the figures showed. Economists forecast a 0.1 percent increase, according to the median estimate in a Bloomberg News survey. The so-called core measure, which excludes the sometimes volatile prices of food and energy, climbed 0.4 percent, the most since January.

The report showed the cost of crude goods fell in July for a third consecutive month, led by declining petroleum and food prices. Slowing sales and a decline in raw materials mean companies will be less likely to raise prices, which may give Federal Reserve policy makers more room to act to spur growth after the nation’s economy almost stalled.

Compared with July 2010, companies paid 7.2 percent more for goods last month after a 7 percent rise in June.

Excluding volatile food and energy costs, wholesale prices were projected to rise 0.2 percent from the previous month, the Bloomberg survey showed. Core wholesale prices climbed 2.5 percent in the 12 months ended in July, the biggest year-to-year increase since June 2009.

Fuel costs fell 0.6 percent as gasoline prices dropped 2.8 percent, the report showed. The cost of finished consumer foods increased 0.6 percent, led by potatoes and cheese.

Expenses for intermediate goods increased 0.2 percent from the previous month, while prices of crude goods dropped 1.2 percent.

Companies were charged 1 percent more for light motor trucks, while pharmaceutical prices climbed 0.4 percent. The cost of tobacco products rose 2.8 percent, the most since March 2009.

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