Wholesale Prices Up 0.4%, Just 1.7% Higher Than a Year Ago : Modest Increase Expected to Ease Fears of Inflation

WASHINGTON —  Wholesale prices in April rose 0.4% from March and were only 1.7% ahead of last April, the government reported today. Analysts said the modest increases should help calm fears of spiraling inflation.

The Labor Department said sharply higher energy prices, especially for natural gas and home heating oil, accounted for about half the April increase.

Excluding volatile energy and food prices, wholesale prices rose only 0.1% from March, the department reported, a “base” rate of inflation that analysts found comforting.

White House spokesman Marlin Fitzwater said: “It’s good news. Producer price inflation remains low.”

“The inflationary fears are being somewhat exaggerated,” agreed Lawrence Chimerine, chief economist for the WEFA group in Bala Cynwyd, Pa. “Inflation is moderate and is not really accelerating very dramatically.”

Factory Inventories Up

In another government report today, the Commerce Department said factory inventories rose a moderate 0.3% while manufacturers’ and trade sales and shipments increased 1.9% from February to March. The department estimated that manufacturers and other businesses had 1.5 months of supplies on hand at the current rate of sales at the end of March, about the same as the end-of-February levels.

Economists had looked to the April wholesale prices report to help discern whether the fear of inflation that drove interest rates up this week was justified.

Year-to-year figures for finished goods showed prices rising only 1.7% while the index for intermediate goods--those midway in the supply pipeline between producer and retailer--rose 5.3% from a year ago. Raw material prices rose 3.6% in the same period, the report said.

David Wyss, chief economist for Data Resources in Lexington, Mass., said it was “overall a good report” but he saw signs of potential trouble in the increases in prices early in the supply pipeline.

“It’s still isolated just here and there, but there do seem to be some signs that industry is running into capacity restraints,” Wyss said.

‘Clouds on the Horizon’

Dirk Van Dongen, president of the National Assn. of Wholesaler-Distributors agreed that the increases in crude and intermediate goods indicate some “clouds on the horizon that need watching.”

Prices of finished energy products jumped 3.1% and crude products were up 2.5%, led by a 3.2% rise in crude oil products, the first increase since last August, the report showed.

Food prices were up 0.4% overall.

The Labor Department also revised its January figures to show a 0.2% increase in wholesale prices instead of the 0.4% jump previously reported.

The Commerce Department’s report said manufacturing inventories built to an estimated $720 billion at the end of March, up only 0.3% from the end of February but 7.7% ahead of March,1987.