Inflation, energy prices climb
Food costs also make bigger jump than analysts anticipated
Energy traders, meanwhile, rewrote the record books again Tuesday, pushing oil futures past $114 a barrel as gasoline and diesel prices struck new highs of their own at the pump.
The Labor Department reported that wholesale prices rose by 1.1 percent last month, the largest increase since a 2.6 percent rise last November. The November gain in the Producer Price Index was the biggest one-month jump in 33 years.
Analysts had expected a much more moderate 0.4 percent rise in wholesale prices for the month. However, food costs, which had fallen by 0.5 percent in February, leapt by 1.2 percent last month, propelled upward by big gains in vegetables and beef and the biggest increase in rice prices in more than five years. Those were far higher increases in food prices than expected.
Core inflation, which excludes energy and food, was better behaved last month, rising by just 0.2 percent, down from a worrisome 0.5 percent rise in February.
But with crude oil prices rising, analysts said consumers should be braced for more bad inflation news to come.
"Wholesale prices are rising, and the consumer should expect more shocks at the supermarket and the gas station," said Joel Naroff, chief economist at Naroff Economic Advisors.
Light, sweet crude for May delivery jumped as high as $114.08 a barrel shortly after regular trading ended Tuesday on the New York Mercantile Exchange. That is nearly $2 above an intraday high set last week.
Concerns about insufficient global supply, stoked by a high-profile report by the International Energy Agency that said Russian oil production dropped this year for the first time in a decade, was largely responsible for the surge. Oil prices rose as high as $113.99 a barrel during the regular session before settling at $113.79, up $2.03 from Monday's record close of $111.76 a barrel.
Prices at the pump also charged ahead. Retail gasoline prices rose to a new average national record of $3.386, according to AAA and the Oil Price Information Service. Prices were highest in California, where mid-range and higher grades are now averaging more than $4 a gallon.
Diesel prices at the pump jumped to $4.119 a gallon, also a record, setting the stage for even higher prices on food and other goods transported by truck, ship and rail.
Prices are widely expected to keep rising as summer approaches. Gasoline futures jumped by nearly 6 cents to finish at a settlement record of $2.881. That is less than a nickel below the all-time intraday high for the benchmark contract that was set as Hurricane Katrina made landfall in 2005.
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