WASHINGTON, Feb 18 (AFP) - US wholesale prices jumped 0.3 percent in January, the government said Friday. The core rate, which excludes volatile food and energy costs, soared 0.8 percent.
The core producer price index (PPI), watched closely by economists for inflationary pressures, rose at the fastest pace in six years, according to the Labor Department report.
The headline PPI figure was in line with forecasts, but the core rate was sharply higher than the 0.2 percent expected by private forecasters.
In the past 12 months, the overall PPI was up 4.2 percent and the core PPI was up 2.7 percent, the biggest year-over-year gain in nine years.
The latest figures sparked fresh concern about inflation, which has been largely in check in recent years.
Marie-Pierre Ripert at Ixis Corporate and Investment Bank said some of the higher prices may be a result of the weaker US dollar, which raises the prices of imports.
She noted that the rise was led by a significant increase in capital equipment prices and some consumer goods prices -- in particular, cars and tobacco.
"Even if a part of the rise is linked to special factors (such as tobacco), the significant rise in core producer prices reflects a rising 'pass through' which could become a cause for concern for the Fed," she said.
"Indeed, (Fed chairman Alan) Greenspan put forward the fact that foreign exporters could begin to raise their prices in dollars in the future if the dollar declines further."
Ian Shepherdson, chief US economist at High Frequency Economics, said, however, that the report is "much less alarming" than it appears.
He said the core rate was boosted by one-time increases in alcohol and tobacco prices, which "are no indication of broad PPI pressure."
Prices for autos and trucks also jumped in January, but Shepherdson said "it is a good bet these increases won't stick."
02/18/2005 14:07 GMT - AFP