Beef Leads Wholesale Prices to 0.8% November Increase : Inflation Rate Stays at 3.3%--Lowest in Years

Wholesale prices, stampeded by another surge in beef costs, surged 0.8% in November, the Labor Department said today.

The increase came on the heels of a 0.9% increase the previous month and means wholesale prices for finished goods have risen at an annual rate of 1.8% through the first 11 months of 1985.

Retail inflation is running at an annual rate of 3.3% so far this year, the lowest in nearly two decades.

At the White House, presidential spokesman Larry Speakes said, “Despite the recent upturns in the Producer Price Index, we believe inflationary pressures are largely held in check.”

Food Costs Up

The November Producer Price Index showed food costs rose 1.6% after seasonal adjustment, in large part because of a 4.5% jump in beef costs. Overall food costs had risen 1.4% in October, beef prices 11.8%.

Another major factor in November’s rise in the overall index was a 3.1% increase in energy prices, the first advance in that category since May, as prices for gasoline and home heating oil rose sharply.

Analysts noted that the financial markets tended to discount the big October wholesale price jump but would be more likely to react negatively to the November report.

However, Donald Ratajczak, a Georgia State University economist who specializes in monitoring both wholesale and retail prices, said:

“The inflationary spurt toward the end of 1985 appears to be the result of shifting seasonal pricing patterns for livestock and a temporary inventory shortage of petroleum goods. Neither of these factors significantly alters the inflationary outlook for the next year.”

Barometer of Prices

Changes that show up in the producer price measure are a good barometer of how food, energy and other commodity prices will move at the retail level. However, the Consumer Price Index, due out next Friday, checks a broader range of items and generally does not follow the producer index’s tendency to bounce sharply from month to month.

The Labor Department offered these specifics at the finished goods level on November wholesale price activity:

--Although the increase in meat and poultry prices drove overall food prices higher, there was a 0.6% decline for fresh vegetables and a 2.1% decline for coffee. On the other hand, dairy products prices soared 12.6% and fresh fruits rose 5.8%.

--Gasoline prices rose 3.7% in November after a 0.9% decline in October, and heating oil prices rose 7.8%. Natural gas costs fell 0.4%.

--Automobile prices, which had been a major factor in the previous two months’ reports, were unchanged in November.

In a separate report, the Federal Reserve Board said today that U.S. industrial output rose 0.4% in November after two consecutive declines.

The report said the November increase erased a 0.4% decline in October, which was the sharpest drop in 12 months.