Rogelio V. Solis, Associated Press
In this Thursday, March 24, 2016, photo, a pallet of honeysuckle-flavored vodka is ready for shipping, out of the Cathead Distillery in Jackson, Miss. On Friday, Jan. 13, 2017, the Labor Department reports on U.S. producer price inflation in December.

WASHINGTON — U.S. wholesale prices rose 0.3 percent in December, led higher by more expensive gas, food and cars.

The producer price index, which measures price changes before they reach consumers, increased 1.6 percent last year, the Labor Department said Friday. That's the biggest 12-month gain since September 2014. Still, it is low historically and suggests inflation is largely in check.

The Federal Reserve has begun to slowly raise interest rates as the job market picks up and is keeping a close eye on inflation. With wages starting to increase more quickly, companies may lift prices to offset those costs. Yet wholesale price increases remain below the Fed's target for overall inflation of 2 percent.

December's gain was led by a big climb in wholesale gas prices, which rose 7.8 percent. Food prices increased 0.7 percent, with chicken eggs, a volatile category, jumping 69.3 percent. Fresh fruits and melons, which soared last month, declined by the most in more than six years.

Prices at the pump rose in December. They averaged $2.35 a gallon nationwide Thursday, 14 cents higher than a month ago.

Excluding the food, energy and retailer profit margin categories, which are volatile month to month, prices rose 0.1 percent in December and 1.7 percent in the past year.

Consumers have seen higher prices in housing and health care in recent months. That's pushed up core consumer prices, which exclude food and energy, by 2.1 percent in the past year.

Ongoing price gains could lead the Fed to raise rates more often this year. At a meeting last month, Fed officials lifted short-term rates by a quarter of a percentage point, to between 0.5 percent and 0.75 percent. They also forecast three additional increases in 2017.