Washington, DC, March 15, 2007--Wholesale prices unexpectedly jumped 1.3% in February, the Labor Department reported Thursday. Increases in the producer price index for finished goods were broad-based.
Economists were expecting a gain of about 0.6% in the PPI.
The PPI has swung wildly in the past six months, driven largely by movements in energy prices. The PPI fell 0.6% in January and rose 0.9% in December. Prices are up 2.5% in the past 12 months, the biggest year-on-year gain since August.
Core prices are up 1.8% in the past 12 months, matching January's year-on-year increase.
Details
Most of the damage was in food and energy prices. Energy prices increased 3.5%, including a 5.3% rise in wholesale gasoline prices and a 4.1% increase in residential natural-gas prices.
Food prices rose 1.9%, as prices for unprocessed foods rose 11.2%. Fresh fruit prices rose 15.7% and fresh vegetable prices rose 8.3%. Pasta prices rose 4.3%, the most in 11 years. Food prices have been rising rapidly, in part in response to the diversion of corn into the ethanol market as a substitute for gasoline.
But other consumer prices were also rising. Cigarette prices rose 4.6%, the biggest gain in six years. Toy prices rose 2.3%, the most in 24 years.
Companies were paying more for trucks, compressors, communication equipment and construction equipment.
Only a few prices fell. Car prices dropped 1.2%. Computer prices dropped 1.6%.
Prices of intermediate goods destined for further processing before final sale rose 1.1%, on a 4.5% rise in energy goods and a 2.6% increase in intermediate foods prices.
Core intermediate prices -- considered one of the best gauges of future inflation -- rose 0.2%. The core intermediate PPI is up 3.7% in the past year.
Crude goods prices rose 8.9% as crude energy prices rose 13.7%. Basic industrial materials prices rose 2.7%. Corn prices rose 16.2% while soybean prices rose 13.6%.
