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More expensive gas raises US wholesale prices: Labor Dept.

WASHINGTON--A sharp rise in gasoline costs drove up U.S. wholesale prices last month by the most in more than three years. But outside energy and food, price gains were mild.

The producer price index, which measures price changes before they reach the consumer, jumped 1.7 percent in August, the Labor Department said Thursday. The increase was mostly because gas prices soared 13.6 percent, the biggest gain in three years.

Food prices rose 0.9 percent, driven by steep increases in the cost of eggs and dairy products. Excluding the volatile food and gas categories, core wholesale prices rose only 0.2 percent, below July's increase.

The government will issue its August report on consumer prices Friday.

In the past 12 months, wholesale prices have increased 2 percent, a mild gain and far below the recent peak of 7.1 percent in July 2011. Core wholesale prices have risen 2.5 percent in the past year, the same annual pace as in July.

Food prices are likely to rise further in the coming months as the Midwest drought has made corn, soybeans and other grains much more expensive. Sweet corn prices jumped 44 percent last month, the most in a year and a half.

Higher corn prices raise costs for many different foods on grocery store shelves. Corn is used to make everything from cosmetics to cereal, soda, cake mixes and candy bars. It is also used as a feed for cattle and hogs. That means more expensive corn can also push up beef and pork prices.

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