FILE - In this April 6, 2015, photo, Marta Crebilo, left, and Jason Thompson prepare chocolate molds at Olive and Sinclair Chocolate in the East Nashville area of Nashville, Tenn. The Labor Department releases the Producer Price Index for July on Friday, Aug. 14, 2015. (AP Photo/Mark Humphrey, File)

FILE - In this April 6, 2015, photo, Marta Crebilo, left, and Jason Thompson prepare chocolate molds at Olive and Sinclair Chocolate in the East Nashville area of Nashville, Tenn. The Labor Department releases the Producer Price Index for July on ... Friday, Aug. 14, 2015. (AP Photo/Mark Humphrey, File) (The Associated Press)

US producer prices expected to show small increase in June

Markets Associated Press

The Labor Department reports on U.S. producer price inflation in July at 8:30 a.m. Eastern Friday.

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LOW INFLATION: The expectation is that the producer price index, which measures inflation pressures before they reach the consumer, rose 0.1 percent, according to a survey of economists by data firm FactSet.

MODERATE PRICES: In June, wholesale prices rose a modest 0.4 percent after being up 0.5 percent in May. Those gains primarily reflected rising energy costs. Excluding food and gas, wholesale prices were up 0.3 percent in June and 0.1 percent in May, an indication that inflation remains well in check.

In recent weeks, gas prices have been falling again with the nationwide average for a gallon of regular now at $2.62, down from $2.77 a month ago. A year ago, a gallon of regular was selling for $3.47.

Inflation is running well below the 2 percent target set by the Federal Reserve. A key price gauge that the Fed monitors is up by just 0.3 percent over the past 12 months, reflecting the big drop in energy prices that has occurred over the past year. Even excluding food and energy, this price gauge has risen just 1.3 percent.

The Fed has said that it needs to feel "reasonably confident" that inflation will move back to its 2 percent target before beginning to raise interest rates from a record low near zero, where a key Fed rate has been since late 2008.

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Many private economists have pegged the Fed's next meeting in September as the time when the central bank will start raising rates. But some economists argue that with inflation still so low, the central bank may wait until December before beginning to raise rates.