Wholesale Prices Rise More Than Expected

Washington, DC, May 14, 2009--Wholesale prices rose more than expected in April as the biggest jump in food costs in more than a year offset a second monthly decline in the price of energy products.

The Labor Department said that wholesale prices climbed 0.3 percent last month, a larger increase than the 0.1 percent that economists had expected.

Even with the larger-than-expected April gain, wholesale prices over the past 12 months have fallen by 3.7 percent, the biggest 12-month decline since 1950. While falling prices can raise fears about deflation, economists believe the efforts by the Federal Reserve to combat the recession will keep that from occurring.

The 0.3 percent rise in the department's Producer Price Index, which measures inflation pressures before they reach the consumer, followed a 1.2 percent plunge in the PPI in March. The April advance was the biggest one-month gain since wholesale prices jumped 0.8 percent in January.

Energy costs in April fell for a second straight month, declining by 0.1 percent after a much larger 5.5 percent drop in March. The April decline reflected lower prices for natural gas and residential electricity which offset a 2.6 percent jump in gasoline prices.

Core wholesale prices, which exclude the volatile food and energy sectors, edged up 0.1 percent last month, in line with expectations, after being flat in March.