Wholesale prices, after tumbling for four months in a row, shot up 0.6% in May as gasoline prices stopped their steep nose-dive and began to climb again, the government reported today.
Despite May's increase, the Labor Department said producer prices so far this year have declined at an annual rate of 7.6%. That is the steepest overall five-month decline since the government began keeping track of wholesale prices in 1947.
The May increase wiped out a 0.6% decline in wholesale prices in April.
At the White House, presidential spokesman Larry Speakes said the jump in inflation appeared to be a temporary development because of the rise in crude energy and food prices.
"However, since the price of crude has dropped back below the $15 a barrel level in June, we expect only modest increases in producer prices over the summer months," he said in a statement.
Industrial Output Down
The government also reported today that U.S. industrial production plunged 0.6% in May, the third giant decline in the past four months.
Output at the nation's factories, mines and utilities is now a full 2% below January's level, reflecting the fall in drilling activity in the petroleum industry and continued sluggishness in the rest of industrial America.
Analysts suggested that the anti-inflationary impact of this year's drop in oil prices may just about have run its course.
Gasoline prices were up 8.6% in May, after a 10.4% drop in April and a record 21.9% drop in March.
However, heating oil prices declined 6% in May after dropping 8.7% in April and 6% in March, partially offsetting the increases in other energy categories.
Natural Gas Climbs
Natural gas prices rose 1.6% in May.
Food prices rose 1.1% last month, the third consecutive monthly increase. Beef was up 5.4%, fresh fruits 11.8% and eggs 12.6%.
The overall May increase, if continued for 12 consecutive months, would equal an annual price increase of 7.8%.
During the past year, food prices have increased 2% overall while energy prices plunged 28.6%. All other goods rose by 2.8% during the same 12-month period.
The Labor Department gave these other details on May price activity:
--New passenger cars rose 0.1% after a 1.6% increase in April.
--Women's clothing increased 0.8%, and children's clothing 0.2%, but there was no change in the price of men's apparel.
--Capital equipment rose 0.1% after a 0.3% increase the month before.
--There was a 0.8% rise in the price of coffee.
It was the first time the producer price index has increased this year. It dropped 0.6% in April, 1.1% in March, 1.6% in February and 0.7% in January.
The recent declines in the value of the U.S. dollar against other major currencies "is keeping producer prices stronger, there's no question about it," said David Wyss, senior vice president for Data Resources Inc., a Lexington, Mass., economic consulting firm.
These price increases are beginning to offset any further drops in the price of energy products, Wyss said.