Labor Dept: Energy Costs Fueling Inflation

Wholesale prices climbed yet again in February as continued large increases in energy costs even offset lower food prices.

The US Department of Labor today released the Producer Price Index (PPI), which showed wholesale prices were up 0.3 % last month. This follows an even bigger 1 % jump in January.

The 0.3 % rise in wholesale prices reflected a 0.8 % jump in energy costs, driven higher by 2.9 percent jump in gasoline prices and 5.7 % increase in residential natural gas prices, the largest increase in more than two years.

Food costs at the wholesale level fell by 0.5 % last month as the cost of vegetables, fruit, dairy products and pork all declined.

Excluding food and energy costs, the rise in inflation was a troubling 0.5 %, the biggest increase in core inflation since 2005.

The staggering increases in energy costs over the past two years are spreading to other areas of the economy as the February increase in core inflation increases demonstrate.

Source: Department of Labor, Bureau of Labor Statistics, Producer Price Index

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