Big gains in food and energy costs pushed US producer prices up a sharp 0.4 per cent last month, but other prices remained largely in check as vehicle prices slumped, a government report showed today.
The Labor Department said the core producer price index (PPI), which excludes volatile food and energy costs, rose 0.1 per cent in February after a 0.8 per cent gain a month earlier.
Although the advance in the overall PPI was a touch ahead of the 0.3 per cent rise expected on Wall Street, the core rate matched forecasts. Overall, the report did nothing to further fan inflation worries as Federal Reserve officials gathered to discuss interest rates.
Prices for US government bonds and the value of the US dollar on foreign exchange markets were little changed after the report as traders remained focused on the Fed's meeting.
Energy prices shot up 1.4 per cent in February, led by a 5.2 per cent increase in the cost of gasoline.
In addition, home heating oil rose 3.8 per cent and the price of liquefied petroleum gas increased 3.2 per cent. Food prices climbed 0.8 per cent. But outside those areas, the pace of price gains eased last month, after swift rises in January that had fueled speculation the Fed might need to step up the pace of its interest-rate rises.
Car prices slid 0.9 per cent and prices for light trucks and SUVs plunged 2.8 per cent in February. Those drops marked a reversal from January, when vehicle prices rose sharply.
The department said cigarette prices, which shot up in January, advanced a milder 0.6 per cent last month. The cost of alcoholic beverages - up 2.8 per cent in January - rose 1.3 per cent last month.
Nonetheless, over the last 12 months, core producer prices are up 2.8 per cent, the biggest gain since a matching rise in the period ended in November 1995.
Overall producer prices have risen a hefty 4.7 per cent, reflecting a big run-up in the cost of oil.