Wholesale Prices Jump 0.5%, Paced by Higher Food Costs
Surging food prices helped push U.S. wholesale prices sharply higher last month, according to government data Thursday that analysts said indicated bubbling price pressures but no clear-cut inflation threat.
A separate report showed a dip in first-time claims for jobless benefits last week, but economists said the drop was too slight to signal quick gains in the labor market.
The reports eased market worries that the Federal Reserve would move quickly to raise overnight interest rates, in part because the claims data suggested that job market improvements were slower than anticipated.
The producer price index, a measure of prices paid to farms, factories and refineries, climbed 0.5% in March, the Labor Department said. But excluding volatile food and energy costs, the core PPI gained a milder 0.2%.
Although the core price gain proved a touch above expectations, some analysts called it mild nonetheless and noted that the 12-month rise was a meager 0.7%.
“That’s just not frightening,” said Sean Callow, a currency strategist at IDEAglobal in New York. “The Fed is not likely to bring forward its rate hike because of these numbers.”
Others, however, said the benign 12-month reading masked a near-term pickup in prices. Over the first three months of the year, core wholesale prices rose at a 2.1% annual rate, well above last year’s small 1% advance.
“Producer prices have been rising more quickly, a signal that inflationary pressures are building,” Steven Wood of Insight Economics said in a research note.
In a separate report, the Labor Department said first-time claims for state unemployment aid fell 9,000 to 353,000 in the week ended April 17, more than the 340,000 analysts expected.
Although initial claims slipped, a four-week moving average of filings, which smooths weekly fluctuations to provide a better picture of underlying trends, rose by 2,250 to 347,000.
It was the second straight gain in the four-week average and brought the reading to its highest level since February, suggesting that the pace of layoffs was no longer slowing.
