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Ahead of the Bell: US Wholesale Prices

FILE - In this Oct 29, 2013 file photo, Sriracha chili sauce is produced at the Huy Fong Foods factory in Irwindale, Calif. The Commerce Department reports on wholesale prices for November on Friday, Dec. 13, 2013. (AP Photo/Nick Ut, File)

WASHINGTON (AP) -- The Labor Department reports on wholesale inflation in December. The report will be released at 8:30 a.m. Eastern Wednesday.

SMALL INCREASE LIKELY: Economists forecast that wholesale prices rose 0.4 percent in December, according to a survey by FactSet. That would reverse decreases in the previous three months, which were primarily because of falling gasoline prices.

Excluding volatile food and energy prices, so-called core wholesale prices are expected to have risen 0.1 percent.

HIGHER GAS PRICES: Wholesale prices track the costs of producing goods before they reach consumers. Both consumer and wholesale inflation have been tame for much of the past year, partly because of cheaper gas.

But gas prices rose in December and likely caused modest inflation for producers, ending three straight months of declining costs.

The average price of a gallon of gas was $3.31 on Tuesday, according to AAA's Daily Fuel Gauge Report. That's up from $3.23 a gallon one month ago.

MILD INFLATION: Businesses have also struggled to raise prices because of historically high levels of unemployment and meager wage growth. The low inflation has also enabled the Federal Reserve to pursue extraordinary stimulus programs to try and boost economic growth.

During the past 12 months, wholesale prices have increased 0.7 percent. Falling gas prices have limited the rise. Excluding energy and food prices, wholesale costs increased 1.3 percent over that stretch.

Inflation has also been held in check by falling costs for raw materials. Prices for corn, wheat, cane sugar, coal and iron ore have each dropped over the past 12 months. Those declines suggest that inflation should be tame in the months ahead.

Inflation has held steady below the Federal Reserve's 2 percent target. Fed officials last month trimmed the size of their monthly bond purchases $10 billion to $75 billion. But Fed Chairman Ben Bernanke warned that extremely low inflation was a concern. He said that the central bank could continue to pump money into the economy to stabilize inflation at target.

The bond purchases are aimed at lowering long-term interest rates to encourage more borrowing and spending.