In this April 2, 2018 photo, a customer reaches for an orange at Buffalo Whole Food & Grain Company in San Francisco. On Tuesday, April 10, the Labor Department reports on U.S. producer price inflation for March. (AP Photo/Jeff Chiu)
Republished April 10, 2018 - 8:12 AM
Original Publication Date April 10, 2018 - 5:41 AM
WASHINGTON - U.S. wholesale prices increased 0.3 per cent in March, driven higher by the largest increase in food costs in nearly four years.
The Labor Department said Tuesday that the March gain in the producer price index, which measures inflation pressures before they reach the consumer, followed a 0.2 per cent rise in February and a 0.4 per cent jump in January.
Food prices at the wholesale level surged 2.2 per cent, the biggest increase since April 2014, with many categories showing gains. Energy costs, however, fell 2.1 per cent as gasoline prices dropped 3.7 per cent, the largest monthly decline since last May.
Over the past 12 months, wholesale prices have risen 3 per cent, the fastest annual pace since last November and another sign that inflation pressures have started to increase after years of being dormant.
Rising food prices are tied to weather that affected crops, but analysts still believe the report shows that inflation pressures are beginning to increase.
"The numbers aren't yet alarming, but neither can we say with any confidence that (wholesale) inflation has peaked," said Ian Shepherdson, chief economist at Pantheon Macroeconomics.
Core inflation, which excludes volatile food and energy prices, was up 0.3 per cent in March, and 2.7 per cent over the past 12 months.
The Federal Reserve last month increased its benchmark interest rate by a quarter-point and signalled that it expected to raise rates a total of three times this year, the same number of rate hikes it delivered in 2017. However, many economists believe that stronger economic growth and a rise in inflation pressures will end up pushing the Fed to slightly accelerate its pace of rate hikes to four increases this year.
The big increase in food costs reflected widespread gains across a number of categories with fish prices jumping 62.5 per cent, the biggest gain since 2014, while egg prices were up 41.6 per cent and vegetable costs rose 31.5 per cent.
News from © The Associated Press, 2018