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Wholesale Prices Surge 1 Pct in March

WASHINGTON (Reuters) - U.S. wholesale prices surged 1.0 percent in March, driven higher by rising energy costs and matching the gains seen last month, the government said on Thursday.

The Labor Department's Producer Price Index (PPI) was more muted when volatile food and energy components were excluded. The core rate rose a slim 0.1 percent, highlighting the impact of the strong gains in energy prices which rose 5.8 percent in March. The core rate rose 0.3 percent in February.

Despite the strong headline number, which matched the 1.0 percent gain seen in February -- the largest gain since October of 1990 -- the report was unlikely to add to inflation worries at the Federal Reserve. The Fed can reasonably hope that energy prices will moderate in the months ahead thanks to a deal struck in late March by OPEC oil-producing nations to increase oil production in the hope of curtailing rising prices.

The Fed has raised interest rates five times since last June in an attempt to cool the U.S. economy and stave off inflationary pressures. Most Wall Street economists expect the central bank to move again at its next policy-setting meeting in May.

Economists had forecast a 0.5 percent gain in March PPI but the core rate came in as expected with a 0.1 percent rise. Excluding energy, price increases elsewhere in the report were subdued.

-- Flash (flash@flash.hq), April 13, 2000

Answers

Let's see... 1% in February, 1% in March, do we hear 1% in April? Doesn't this rate add up to 12% a year to those of us that have to buy things?

But it's not inflationary, of course!

-- Flash (flash@flash.hq), April 13, 2000.