Wholesale Index Up 0.6%; Price Increase Biggest in 11 Months

Wholesale prices jumped 0.6% in March, the biggest increase in 11 months, the government said today in a report that added to jitters on financial markets about inflation and the health of the economy.

The March increase more than erased a 0.2% drop in February. If the March rate held for 12 months, the full-year wholesale inflation rate would be 7%, compared to 2.2% for all of 1987.

The Labor Department said in today’s report that energy prices, which had been falling at an annual rate of 17%, rose 0.9% last month, their first increase since August.

Food prices, after dropping 1.1% in February, advanced by 0.7% last month. For the first three months of the year, beef and veal prices climbed 43.6%.

Overall, wholesale prices rose at an annual rate of 3.1% from January through March.

Inflation Pressure

“The widespread nature of these price changes suggests that inflation pressures may be intensifying,” said Donald Ratajczak, a Georgia State University economist who specializes in wholesale price trends.

Ratajczak and other economists anticipated that today’s price report would add to the havoc evident Thursday following the government’s announcement that the nation’s trade deficit worsened significantly in February.

“Yesterday’s news and the flailings of the lemmings on Wall Street combined with today’s price numbers are going to create a volatile climate for a while,” said Dirk Van Dongen, president of the National Assn. of Wholesalers. “Again, they were a surprise and above the predictions of all the experts.”

White House Disappointed

White House spokesman Marlin Fitzwater said the Reagan Administration was “disappointed” with the increase in wholesale prices today as well as the trade figures Thursday.

“We think the market has overreacted to a one-time report,” Fitzwater said, referring to Thursday’s 101.46-point drop in the Dow Jones industrial average, “and we hope this thing will stabilize.”

Reflecting the broad nature of March’s price gains, the Labor Department said that its index of wholesale prices for consumer goods other than food and energy rose 0.4%, compared with a 0.3% increase in February.

Food, Energy Excluded

Because food and energy prices can fluctuate greatly from month to month, analysts look to the calculation that excludes them as providing a good underlying indication of inflationary pressures. For the first three months of 1988, wholesale prices for goods other than food and energy rose at an annual rate of 5.7%.

Automobile prices were up 1% last month, restoring them to the level they had been at in November before manufacturers began offering dealers rebates and other incentives.

Prescription drug prices rose 1.3%, and over-the-counter drug costs advanced 2% in March.

Wholesale gasoline prices rose 1.5% after dropping about 9% since November.