Gas prices nudge inflation
Food also contributes to ‘blip’ in wholesale prices
WASHINGTON – A spike in the cost of gasoline pushed wholesale prices higher in March, a trend that could limit consumer spending in the coming months.
Still, most economists don’t expect that will lead to widespread inflation because businesses are wary of raising prices when most people aren’t getting significant pay increases.
Gas at the wholesale level jumped 5.7 percent in March. Much of the price increase is being passed along to consumers, who on Thursday paid an average of $3.81 for a gallon.
Diane Swonk, chief economist at Mesirow Financial, said the economy is seeing “a blip” in inflation because of the rise in gas prices, as well as higher food costs. But “it is just very hard for the broader economy to hold price increases for very long when that blip is causing consumers to curtail spending elsewhere,” she said.
Overall, the producer price index, which measures price changes before they reach the consumer, rose 0.7 percent last month and is up 5.8 percent over the past year, the Labor Department said Thursday. Food prices eased slightly in March after having risen in the previous month by the most in 36 years.
Excluding volatile food and energy, inflation at the wholesale level was relatively tame.
There were some signs that could change. New car prices rose by the most in nearly two years and the cost of some types of furniture jumped. Still, core prices have risen by less than 2 percent over the past year, well within the Federal Reserve’s preferred range for inflation.
Consumer prices are also increasing but at a slower rate than wholesale costs. The government gives its March reading on those prices today. Economists expect the gains will match those made in February.
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