U.S. companies paid higher prices for tobacco, vehicles, and pharmaceuticals in July, driving underlying wholesale inflation up by the most in six months, the government reported Wednesday. The Labor Department said the "core" Producer Price Index (PPI) -which excludes volatile energy and food costs- rose 0.4 percent last month, the biggest increase since January. Overall PPI, which measures all price changes before they reach consumers, rose 0.2 percent in July, following a 0.4 percent decline in June, the first drop in 17 months. A key reason for the increase in core PPI was a 2.8 percent jump in tobacco prices -the biggest in more than two years- which accounted for about a quarter of the gain in the core index. Gasoline prices fell for the second consecutive month, while food costs rose 0.6 percent, the biggest gain since February. Over the past 12 months, the PPI has increased 7.2 percent, up sharply from earlier this year. Core PPI has increased 2.5 percent in the past 12 months, the most since June 2009.
