Wholesale Prices Jump 0.7% in April

Wholesale prices, stoked by higher costs for gasoline and food, registered their biggest rise in a year during April, providing fresh evidence that inflation is awakening after a long slumber.

The Labor Department reported Thursday that the producer price index, which measures the prices of goods before they reach stores, rose by 0.7% last month, following a 0.5% gain in March.

April’s increase was the largest since a 1.3% increase in March 2003 and topped the 0.3% advance that economists were forecasting. Sharply higher prices for energy and food were the culprits of the gauge’s increase last month.

Excluding energy and food prices, the core index rose in April by 0.2% for the second straight month, in line with analysts’ expectations.

In other economic news, sales at retailers dropped by 0.5% in April after a 2% gain in March, the Commerce Department reported.

April’s performance suffered from a sharp drop in automobile sales.

Economists viewed the decline as a temporary respite for shoppers because they splurged so much the month before. Analysts did not see the drop as a harbinger of drastic belt-tightening by consumers, whose spending accounts for about two-thirds of all economic activity.

Still, rising energy prices can crimp spending on other goods, a possible factor in April’s sales decline and something that needs to be monitored, analysts said.

“When consumers are forced to pay more at the pump, it affects their spending in other categories,” said Tracy Mullin, president of the National Retail Federation.

New filings for unemployment benefits rose last week by 13,000, to 331,000, the Labor Department said. Even with the increase, claims were at a level suggesting that the job market was improving.

The more stable four-week moving average of claims, which smooths out weekly fluctuations, fell last week to 335,750, the lowest since Nov. 25, 2000.