Washington, Jan. 14--Producer prices rose only slightly in December, backing the Federal Reserve's view that inflation remains tame and that the central bank can afford to keep interest rates low for much of 2004.
The producer-price index rose 0.3% in December, fully reversing November's 0.3% decline, the Labor Department reported Wednesday. The rebound mostly reflected a surge in food and energy prices. The closely watched core index, which excludes food and energy items, fell by 0.1%, the same as in November.
Food prices climbed 0.2%, after a 0.3% drop in November. Energy costs rose 1.8%, the biggest surge in six months. Gasoline prices shot up 5.1%, the biggest gain since August, after a 4.8% drop in the previous month.
Economists had expected overall PPI to climb 0.2%, and for the core index to edge up 0.1%.
The report was the second this week to show tame inflation; the government said Tuesday that import prices rose a scant 0.2% in December, less than half the rate in November. A reading on the most closely watched gauge of inflation, consumer prices, is due out on Thursday.
In annual terms, producer prices rose 4%, the biggest gain in 13 years. But the core index rose only 1% from a year earlier.
