Cost of Food Triggers Hike in Price Index

Wholesale prices, boosted by a sharp jump in food costs, rose 0.3% in July, the government reported today.

The gain in the producer price index followed a revised 0.2% decline in June. For the first seven months of the year, wholesale prices have risen at an annual rate of 1.4%.

Wholesale prices for the last 12 months have risen just 0.9%.

Few analysts see any reason to worry that this good performance will change in coming months, although some warn that inflation will pick up somewhat next year as the effect of a declining dollar is felt.

‘Super Performances’

“We should have a better performance on inflation than we did last year and one in line with the super performances of the early 1960s,” said Allen Sinai, chief economist for Shearson Lehman Brothers. “The economy remains slack, oil and energy prices are dropping and commodity prices continue to benefit from earlier increases in the dollar.”

Food costs, which had been declining through the first half of 1985, jumped 1.3% last month, fueled largely by sharply higher prices for fresh vegetables and pork.

Pork prices rose 6.9%. Fish costs, less important to the overall index, were up 7.1%.

The biggest spurt was a 22.2% rise in fresh vegetable prices.