June 13 (Bloomberg) -- Chrysler LLC, the third-largest U.S.-based automaker, said it will boost prices an average of 2 percent on all 2008 model-year cars and trucks because of rising costs for steel and other commodities.

The increase will take effect on vehicles shipped to dealers starting June 16, Chrysler spokesman Stuart Schorr said. Chrysler's U.S. sales fell 19 percent in the first five months of this year.

``Today's economic conditions and future forecasts indicate unrelenting pressure as it relates to commodity prices, specifically steel, which have forced our hand,'' Schorr said in a statement.

Chrysler said the increase will bring its models in line with competitors' actions. General Motors Corp. raised prices as much as $1,500 in December because of higher commodity expenses and Ford Motor Co. Chief Executive Alan Mulally said May 22 that the burden was among the reasons his company was forced to abandon a 2009 profit goal.

Chrysler reported a $1.6 billion operating loss for 2007 and a $650 million net loss for 2006, when the Auburn Hills, Michigan-based automaker was part of the former DaimlerChrysler AG. Chrysler CEO Robert Nardelli told CNBC this week that the automaker had $9 billion in cash at the end of last year.

The automaker cut first-quarter U.S. advertising expenses by 42 percent, according to data released June 11 by TNS Media Intelligence. Chrysler also told contractors including office- supply vendors and construction companies to accept a 5 percent price reduction that began June 1.

Automotive News reported the price increase earlier today.

To contact the reporter on this story: Jeff Green in Southfield, Michigan at jgreen16@bloomberg.net

Last Updated: June 13, 2008 18:13 EDT