Newspaper article THE JOURNAL RECORD

Increase in Wholesale Prices Surprisingly High

Newspaper article THE JOURNAL RECORD

Increase in Wholesale Prices Surprisingly High

Article excerpt

WASHINGTON - Wholesale prices, pushed up by the steepest increase in food costs in 22 months, rose 0.4 percent in October, the government reported Thursday.

The increase in the Labor Department's Producer Price Index was markedly smaller than the 0.9 percent jump in September but was still surprisingly high to many economists.

The September and October advances followed rare monthly declines in July and August.

Prices have been on a roller coaster this year, first surging ahead and then easing during the summer after food and energy costs moderated.

For the first 10 months of the year, wholesale prices have been rising at an annual rate of 5.2 percent, compared with an increase of 4 percent for all of 1988.

Food costs rose a steep 1.4 percent in October, following declines in three of the four previous months. Analysts said the jump in food costs reflected in part bad weather that affected California and Florida vegetable crops.

Vegetable prices shot up 18.9 percent. Other big advances in the food category were a 9.5 percent increase in pork costs, a 5.6 percent rise in fish prices and a 4.9 percent increase for fruit.

The overall 1.4 percent advance in food costs was the biggest advance since a 1.5 percent rise in January 1988. But analysts said the one-month increase in the volatile food category was not alarming given the fact that food costs had been falling.

Energy costs, which had been the driving force behind the September spurt in the overall index, moderated in October to a slight 0.2 percent increase, far below the 6.5 percent surge in the previous month.

Gasoline prices were up 2.3 percent after a 10.6 percent jump in September. The cost of natural gas dropped by 2.5 percent while home heating prices fell by 0.5 percent last month.

Wholesale prices, excluding energy and food costs, were up a tiny 0.1 percent in October. Many analysts consider this figure a better gauge of underlying inflationary pressures. …

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