Producer Prices Rose in 2013 by Least in Five Years

Jan. 15 (Bloomberg) — Wholesale prices in the U.S. climbed in December for the first time in three months to cap the smallest annual increase in five years, showing companies face little pressure to charge more.

The 0.4 percent increase in the producer-price index matched the median estimate of 79 economists surveyed by Bloomberg and followed a 0.1 percent drop in November, a Labor Department report showed Wednesday in Washington. The so-called core measure, which excludes food and energy, climbed more than forecast, led by the biggest surge in tobacco costs since 2007.

The 1.2 percent advance for the calendar year was the smallest since 2008, when the financial crisis made the recession that began in December 2007 even worse. Scant signs of accelerating inflation have given Federal Reserve policy makers room to move gradually as they wind down their unprecedented asset-purchase program.

“Pipeline inflation pressure is still pretty well contained,” said Gennadiy Goldberg, a U.S. strategist at TD Securities USA LLC in New York. “The lack of inflation pressures will give the Fed more room to maneuver.”

Another report showed factories in the New York region expanded in January at the fastest pace in more than a year. The Federal Reserve Bank of New York’s so-called Empire State index, which covers New York, northern New Jersey and southern Connecticut, jumped to 12.5 this month, the highest since May 2012. Readings greater than zero signal growth.

Shares Climb

Stock-index futures held earlier gains after the reports. The contract on the Standard & Poor’s 500 Index maturing in March climbed 0.1 percent to 1,835.5 at 8:49 a.m. in New York.

Last year’s increase in producer prices followed a 1.4 percent advance in 2012.

Estimates for the change in December wholesale prices in the Bloomberg survey ranged from a drop of 0.1 percent to a gain of 0.8 percent.

Core producer prices rose 0.3 percent in December, exceeding the projected 0.1 percent gain. Almost half the increase was attributed to a 3.6 percent jump in the cost of tobacco products that was the biggest since February 2007.

Core prices climbed 1.4 percent in the 12 months ended in December, the smallest annual gain since 2010.