Wholesale Prices Inch Up 0.2% Despite Soaring Produce Prices

WASHINGTON â€”  Bad weather sent fruit and vegetable prices soaring in September, but otherwise inflation remained in check with wholesale prices edging up only 0.2%.

The tiny increase was viewed as good news by economists, who noted it was the first gain in five months. So far this year, wholesale prices are rising at an annual rate of 0.8%, even better than last year’s modest 1.6% increase.

The government also said retail sales rose for the sixth straight month in September, with clothing and furniture stores doing particularly brisk business.

In a third report, the number of Americans filing first-time claims for unemployment benefits rose by 8,000 last week to 329,000, but the increase still left claims near four-year lows and was not viewed as any sign of renewed labor market weakness.

Instead, analysts said the latest batch of statistics painted a fairly bright picture of an economy shaking off a six-month stall and poised to resume stronger growth but without any worries over inflation.

“The numbers that came out today couldn’t have been better,� said Bruce Steinberg, an economist at Merrill Lynch in New York. “It tells us we have moderate economic growth with no inflation.�

The Labor Department said the 0.2% increase in its producer price index, which measures inflation pressures before they reach consumers, was the first increase since a 0.6% jump in April.

Energy prices were unchanged in September as a 1.6% decline in gasoline prices was offset by increases in home heating oil, residential electricity and natural gas.

Food costs jumped 0.7%, reflecting steep increases for a range of fruit and vegetable products.

Analysts blamed the increases on the Midwest floods and drought conditions in farm areas of California and the East Coast that pushed up the cost of avocados, oranges, cucumbers and broccoli.

Producer Price Index

For finished goods; seasonally adjusted change from prior month:

Sept., ‘93: +0.2%

Source: Labor Department