WASHINGTON (AP) — Cheaper gas likely offset rising food prices to keep a measure of wholesale inflation tame last month.
Economists forecast that the producer price index fell 0.1 percent last month, according to a survey by FactSet. That would be the third straight decline. The index fell 0.8 percent in November after a 0.2 percent drop in October.
Excluding the volatile food and gasoline categories, wholesale prices likely rose only 0.2 percent in December.
The Labor Department will release the report at 8:30 a.m. EST Tuesday.
The index measures the cost of goods before they reach the consumer. In the 12 months ending in November, wholesale prices have risen just 1.5 percent. And core prices have increased just 2.2 percent.
Low inflation means consumers have more money to spend, which helps the economy. It also gives the Federal Reserve more room to keep interest rates low in an effort to spur economic growth. If prices were to begin rising rapidly, the central bank might be forced to raise rates in response.
As long as inflation stays mild, the Fed said it plans to keep the short-term interest rate it controls near zero until the unemployment rate falls to at least 6.5 percent.
Gas prices have fallen sharply this fall, dragging the overall index lower. Nationwide, the average cost of gas was $3.30 a gallon on Monday, according to AAA. That's about the same as it was a month ago and well below summer prices that nearly touched $4 a gallon.
While gas prices are lower, food prices at the wholesale level have increased rose. In November, they rose by the most in nearly two years, pushed higher by costlier beef and vegetables.
Grocery stores could mark up the prices of those products in the coming months, but probably not by as much. High unemployment and weak wage increases will make it hard for retailers to pass on all of the higher costs.