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Wholesale prices rise due to higher gas costs

Wholesale prices rise due to higher gas costs

April 14th, 2011 in News

WASHINGTON (AP) - More expensive gas, cars and furniture pushed wholesale prices higher last month.

The Labor Department said Thursday the Producer Price Index, which measures price changes before they reach the consumer, rose 0.7 percent in March. That's down from 1.6 percent in February. The index has increased 5.8 percent in the past year.

Excluding volatile food and energy costs, prices rose 0.3 percent - the second highest increase in the past year. The price of new cars rose by the most in nearly two years, while the cost of some types of furniture jumped 6.5 percent. Still, core prices are only up 1.9 percent over the past year, a relatively tame rate of inflation.

Gas prices jumped 5.7 percent in March. Food prices dipped last month, after soaring by the most in 36 years in February because of a harsh winter freeze that raised the cost of fresh vegetables. Egg prices dropped 20 percent.

Economists say rising oil and gas prices could slow the economy, leaving consumers with less money to spend on other goods. But average hourly pay has only risen 1.7 percent in the past year, a fact that is likely to keep inflation from spreading.

Employers have little incentive to raise pay when the unemployment rate is high. But businesses are also unlikely to raise prices by much if they sense people can't afford to pay the added costs.