Wholesale prices rose more than expected last month as food prices surged by the most in 26 years.
The Labor Department said the Producer Price Index rose by 0.7 percent in March, compared to analysts’ forecasts of a 0.4 percent rise. A rise in gas prices also helped push up the index.
Still, there was little sign of budding inflation in the report, which measures price changes before they reach the consumer. Excluding volatile food and energy costs, wholesale prices rose by 0.1 percent, matching analysts’ expectations.
Food prices jumped by 2.4 percent in March, the most since January 1984. Vegetable prices soared by more than 49 percent, the most in 15 years. A cold snap wiped out much of Florida’s tomato and other vegetable crops at the beginning of this year.
Gasoline prices rose 2.1 percent, the department said, the fifth rise in six months.
In the past year, wholesale prices are up 6 percent, with much of that increase driven by higher oil prices. But excluding food and energy costs, they have risen only 0.9 percent.
Consumers are facing smaller price increases, as many retailers are reluctant to pass on higher costs. Last week, the Labor Department said the consumer price index rose only 0.1 percent in March. Excluding food and energy, the core consumer index was unchanged.
Core consumer prices rose by just 1.1 percent in the past 12 months, the department said last week, the best showing since January 2004.
Low inflation has enabled the Federal Reserve to keep the short-term interest rate it controls at a record low of near zero in an effort to boost the economy.
The country’s worst recession since the 1930s has kept a lid on prices, as high unemployment and tight credit have crimped consumers’ spending power. That has made it harder for companies to raise prices.