WASHINGTON - The prices companies receive for the goods and services they produce jumped last month, led by gains for food, clothing, jewelry and chemicals, the U.S. Department of Labor reported Friday.
The producer price index, which measures price changes before they reach the consumer, rose 0.5 percent in March. Overall, inflation remains relatively tame, with producer prices increasing 1.4 percent during the past 12 months.
And, in a second economic report, consumer confidence rose in April to the highest level since July, bolstered by further improvement in the labor market that will provide some traction for the economy after a weather-related slowdown early this year.
The Thomson Reuters/ University of Michigan preliminary index of sentiment climbed to 82.6 this month from a four-month low of 80 in March. The median estimate in a Bloomberg News survey of economists called for the measure to increase to 81.
In the producer price index, wholesale food prices rose last month, led by a 30.4 percent leap in the costs of hogs and 12.4 percent increase in poultry. Those increases were partially offset by a 2.4 percent decline in gasoline prices and a 0.7 percent drop for electric power. Excluding the volatile categories of food, energy and retailer and wholesaler profit margins, core prices ticked up 0.3 percent.
Some of the higher prices were due to a “distortion caused by the unusually bad weather” in previous months, said Paul Dales, senior U.S. economist at Capital Economics. Snowstorms kept many shoppers at home and hurt retail sales. The margins of clothing wholesalers and retailers bounced back in March, rising by 3.3 percent to push up overall producer prices.
The Michigan consumer confidence figures are at odds with Bloomberg’s weekly measure of sentiment. The Bloomberg Consumer Comfort Index dropped last week to a two-month low as measures of Americans’ views on the economy, their personal finances and the buying climate all declined.
The Michigan survey’s index of expectations six months from now increased to 73.3, the highest since August, from 70 last month. The gauge of current conditions, which measures respondents’ views of their finances, climbed to a four-month high of 97.1 in April from 95.7.
“The confidence that we had going into 2014 got pushed back a couple months, but now we’re going to see it blossom in the spring,” said Jay Morelock, an economist at FTN Financial in New York, who projected a reading of 82.3. “Expectations are high for the second quarter to really rebound from the first quarter.”
Still, rising gasoline and food prices are straining household budgets. The average price of a gallon of regular gasoline climbed to $3.62 Thursday, the highest since early August, according to AAA, the nation’s largest motoring organization. In 2013, fuel costs averaged $3.49 a gallon.
Americans are paying more at the grocery-store checkout line, as well. Food and beverage prices increased 0.4 percent in February, the most since September 2011, after at 0.1 percent rise a month earlier, according to a March 18 Labor Department report.
Friday’s figures from the agency showed further increases may be in store. Wholesale food costs jumped 1.1 percent in March, the most since May and led by higher prices for meats, including pork and sausage.
Progress in the labor market may help keep sentiment from faltering. Jobless claims dropped by 32,000 to 300,000 in the week that ended April 5, the lowest since May 2007, Labor Department data showed. The figure was lower than the most optimistic forecast in a Bloomberg survey of economists, while the median estimate called for 320,000 claims.
Inflation has been near historic lows during the past two years. The producer price index rose just 1.2 percent in 2013 after a 1.4 percent increase in 2012. Both figures are far below the Federal Reserve’s preferred target of 2 percent. The economy has struggled to accelerate during the 4½-year recovery from the the recession. Wage growth has been close to flat, while unemployment remains at historically high levels. This limits consumer spending and limits the ability of businesses to raise prices.
Low inflation has enabled the Fed.to pursue extraordinary stimulus programs to boost spending, hiring and overall economic growth.
The Fed has begun to unwind some of that stimulus, although it intends to prolong its near-zero short-term interest rates, in part, because inflation has been so low. The U.S. central bank has cut its monthly bond purchases to $55 billion, down from $85 billion last year. The bond purchases are aimed at lowering long-term interest rates to bolster growth.
The economy has started to improve after a winter slowdown. Employers added 192,000 jobs in March and 197,000 in February, according to a government report issued last week. Snowstorms and low temperatures cut into job gains in December and January.
Hiring over the past two months suggests the economy may be gaining steam with the start of spring, likely encouraging the Fed to continue reducing its stimulus despite concerns about low inflation.
And, figures released last week indicated consumer spending is on the mend after winter weather restrained demand.
Cars and light trucks sold in March at a 16.3 million annualized rate, the fastest pace since May 2007, after a 15.3 million pace the prior month. Purchases at General Motors, Ford, Toyota, Nissan and Chrysler all topped analysts’ estimates.
Information for this article was contributed by Josh Boak of The Associated Press and by Michelle Jamrisko and Kristy Scheuble of Bloomberg News.
Business, Pages 31 on 04/12/2014