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Wednesday May 25th, 2016 6:53PM

Wholesale costs fall for 3rd month on cheap gas

By The Associated Press
WASHINGTON (AP) -- U.S. wholesale prices dropped in November for the third consecutive month, pushed down again by cheaper gasoline and lower home heating oil costs. But excluding volatile energy costs, inflation was mostly stable.

The producer price index, which measures prices before they reach the consumer, declined 0.1 percent last month, the Labor Department said Friday. This comes after similar decreases in October and September.

Overall wholesale prices have risen just 0.7 percent in the past 12 months.

Excluding energy and food prices, so-called core wholesale prices increased 0.1 percent in November and 1.3 percent over the past 12 months.

Both consumer and wholesale inflation have been running extremely low in the past year. High unemployment and weak wage increases have made it difficult for businesses to raise prices.

Mild inflation has allowed the Federal Reserve more latitude to use its policies to try and stimulate growth. And some Fed officials have raised concerns that inflation is running too low.

Energy costs have kept inflation well below the Fed's 2 percent target. In November, gas costs tumbled 0.7 percent and home heating oil prices plunged 5.7 percent. The costs for new cars also fell 0.8 percent last month.

Consumers are benefiting from cheaper prices, particularly when they fill up their cars and trucks. The average national price for a gallon of gas was just $3.25 on Friday, according to AAA's Daily Fuel Gauge Report.

The Fed has said it will keep the short-term interest rate it controls at nearly zero at least until the unemployment rate falls below 6.5 percent and as long as inflation isn't expected to rise above 2.5 percent at an annual rate in the near future. The unemployment rate fell to 7 percent in November.

Low inflation has also allowed the Fed to continuing buying bonds to try and lower long-term interest rates.

Fed officials meet on Tuesday and Wednesday to evaluate their interest rate policies.
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