Gas prices fuel inflation

WASHINGTON — The biggest jump in gasoline prices in six months helped push inflation at the wholesale level higher in May, although inflation outside of energy remained well-behaved.

Wholesale prices rose by 0.9 percent last month, worse than the 0.6 percent advance analysts expected, the Labor Department reported Thursday. The price surge was led by a 10.2 percent jump in gasoline prices, the biggest one-month increase since last November.

However, food prices declined for the first time in seven months and, outside the volatile food and energy sectors, core inflation posted a moderate 0.2 percent increase. That was slightly better than the 0.3 percent advance analysts had anticipated.

Wall Street rose on the inflation report, with investors believing it would not set off alarm bells at the Federal Reserve. Analysts said they think the central bank, which last moved rates a year ago, will remain on hold for the rest of the year. While that puts off any possible rate cuts, it also means the Fed won't be raising rates, either. However, Fed Chairman Ben Bernanke and other officials were expected to continue declaring they are more worried about the possibility of inflation than that economic growth could stall out.

"Given the tight labor market and peppier economy, the Fed will continue to worry that this favorable trend could come to an end," said Sal Guatieri, senior economist at BMO Capital Markets.

The Dow Jones industrial average rose 71.37, or 0.53 percent, to 13,553.72. The Dow has risen 258 points over the past two sessions, logging its largest two-day point gain since July 18-19.

Broader stock indicators also rose Thursday. The Standard & Poor's 500 index advanced 7.30, or 0.48 percent, to 1,522.97, and the Nasdaq composite index climbed 17.10, or 0.66 percent, to 2,599.41.

In other economic news, the Labor Department reported that claims for unemployment benefits totaled 311,000 last week, unchanged from the previous week. That was a better outcome than the small rise in claims analysts had expected and supported the view that the job market has held up remarkably well in the face of a yearlong economic slowdown.

The 0.9 percent rise in the Producer Price Index marked the fourth consecutive hefty increase in this gauge, which measures cost pressures before they reach the consumer. Wholesale prices had risen by 0.7 percent in April and were up by 1 percent in March and 1.3 percent in February.