Wholesale prices surged 1.0 percent in February, matching the January increase and marking the worst back-to-back news on inflation in nearly eight years, the government said Friday.

The identical increases in the Labor Department's Producer Price Index mean that prices that are one stop short of the retail level have risen at an annual rate of 12.6 percent so far this year.Not since March and April of 1981 have prices risen so sharply for two months in a row. Wholesale prices rose 4.0 percent last year.

Stock and bond prices tumbled after Friday's report. The Dow Jones average of 30 industrial stocks plunged 50 points in the first half hour of trading and never recovered, closing at 2,292. (Story on D10.) The evidence of resurgent inflation renewed traders' fears that the Federal Reserve Board will push interest rates higher.

That would increase the government's cost of financing the $2.7 trillion national debt, which would be bad news for President Bush, who is trying to trim the budget deficit without raising taxes.

Bush, speaking to reporters as he returned to Washington from Colorado, said his administration would "always be vigilant against inflation (and) never relax our concern."

He said the best way to beat inflation would be an agreement with Congress to reduce the deficit. He called Friday's report "another clarion call to do something." Negotiators from Capitol Hill and the White House will exchange proposals next week on bringing down the deficit.

Bush's remarks amount to a shift in his rhetoric. Previously, the president has said he is not overly concerned with inflation and interpreted economic reports less negatively than the Federal Reserve.

Many economists had dismissed the January inflation news, including a 0.6 percent rise in the Consumer Price Index, the largest in two years, as at least a partial aberration and had predicted only a moderate 0.4 percent climb in wholesale prices in February.

With the latest report, "it's difficult to put a happy face on it," said Undersecretary of Commerce Robert Ortner. "There's no other interpretation that can be put on it other than it shows a pickup in inflation."

Prices in both January and February were pushed up by soaring energy and food prices, but the cost of other items, which are generally more stable, increased at a worrisome rate in February as well.

Wholesale food prices rose 1.2 percent last month, the steepest increase in 13 months. They had risen 1.1 percent in January.

Meat and most other food items rose, while eggs dropped 15 percent after rising 20.1 percent in January. Food prices were led by a 35.3 percent increase in vegetables, including a huge 158 percent rise in tomato prices.

Economist Donald Ratajczak of Georgia State University said beef prices should continue to rise through the spring, until ranchers can rebuild herds that were thinned by extra slaughtering during last summer's drought.