January wholesale prices up 0.4%

Increase in energy costs offsets decline for food, data show

A worker pushes a hand truck at the BSD Industries facility in Chicago in December. The rise in wholesale prices in January is seen underscoring signs of stronger inflation.
A worker pushes a hand truck at the BSD Industries facility in Chicago in December. The rise in wholesale prices in January is seen underscoring signs of stronger inflation.

WASHINGTON -- U.S. wholesale prices rose 0.4 percent in January, the biggest increase since November, as a big jump in energy prices offset a small decline in the cost of food.

The January rise in wholesale prices, which measure the cost of goods before they reach the consumer, followed no increase in December and matched a 0.4 percent rise in November, the Labor Department reported Thursday. The big gains last month and in November were both driven by sharp increases in the cost of gasoline and other energy products.

Over the past 12 months, wholesale prices have risen 2.7 percent. On Wednesday, the government reported that consumer prices rose 0.5 percent in January, another sign that inflation may be set to rise after years of near flat readings.

The recent acceleration in both wages and prices is one of the factors triggering gyrations in financial markets. Investors believe it has become more likely that the Federal Reserve will grow more aggressive with interest-rate increases this year to keep inflation under control. Low interest rates have fueled one of the strongest bull markets in U.S. history.

The government said Thursday that the number of unemployed workers filing for jobless benefits rose by 7,000 last week to 230,000. The small increase reversed a drop of 7,000 the previous week. Application for unemployment benefits, a proxy for layoffs, have been below 300,000 for three years, the longest stretch in more than four decades and a sign of labor market strength. The jobless rate is at a 17-year low of 4.1 percent.

Wholesale price data on Thursday showed that energy prices rose by 3.4 percent in January, with a 7.1 percent increase in gasoline prices, and similar increases in the cost of jet and diesel fuel.

Food costs dropped 0.2 percent, led by a 38.9 percent plunge in the price of eggs, the biggest drop in two years, which helped offset a 3.4 percent increase in the cost of vegetables.

The producer price index excluding food, energy and trade services, a measure some economists prefer because it strips out the most volatile components, rose 2.5 percent in January from a year earlier -- the fastest in data back to August 2014 -- following a 2.3 percent gain.

The overall producer price index reflected a 0.7 percent gain in the cost of goods and a 0.3 percent increase in services prices. Prices for hospital outpatient care rose 1 percent, the most since 2014, and were a "major factor" in the January rise in the services gauge, according to the report.

Apparel retailing, a category that helped drive the outsize gain in the consumer price index, rose by the most in a year, while wireless telecommunications services fell by the most since last February.

Information for this article was contributed by Bloomberg News.

Business on 02/16/2018

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