Wholesale prices rise with core inflation up at fastest pace in 15 months
WASHINGTON — Wholesale prices rose again in February as another hefty increase in energy costs offset falling food prices. Outside of food and energy, prices shot up at the fastest pace in 15 months.
The Labor Department reported Tuesday that wholesale prices were up 0.3 percent last month, after an even bigger 1 percent jump in January.
Outside of food and energy, the rise in inflation was a troubling 0.5 percent, the biggest increase for core inflation since a rise of 0.9 percent in November 2006.
The hefty February increase in core inflation raises concerns that relentless increases in energy costs over the last two years are beginning to spread to other areas of the economy.
That could act as a constraint on the Federal Reserve, which is trying to combat a serious economic slowdown by cutting interest rates to jump-start economic growth.
However, if inflation starts to be a problem, the Fed could be caught in the grips of stagflation, the malady of stagnant growth occurring at the same time that inflation is rising.
The February rise in wholesale prices reflected higher costs not only for energy but also for cars and light trucks as well as a 1.3 percent jump in prescription drug prices.
For the last 12 months, wholesale prices have risen by 6.4 percent payday loans. Even while excluding food and energy, inflation is up 2.6 percent, the biggest 12-month change for core inflation since the period ending last October.
Ian Shepherdson, chief U.S. economist at High Frequency Economics, said the overall figure will be even worse next month given that energy prices have been soaring. Crude oil prices hit new records last week above $111 per barrel.
In another sign of troubles in housing, construction of new houses fell by a larger-than-expected 0.6 percent in February to an annual rate of 1.065 million units.
That was a bigger decline than the 0.2 percent drop that Wall Street had been expecting although January was revised up to show a stronger gain than originally reported.
However, building permits, considered a good indication of future activity, plunged by 7.8 percent in February to an annual rate of 978,000 units, the slowest pace in 16 years.
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