U.S. producer prices climbed more than forecast in January as companies tried to boost earnings at the start of the year before demand weakened even more. The 0.8 percent increase in wholesale costs was higher than projected and followed a 1.9 percent drop in December, figures from the Labor Department showed today in Washington. Excluding food and fuel, so-called core prices rose 0.4 percent, also more than anticipated. Auto, computer and pharmaceutical makers were among the industries boosting prices last month even as sales slumped. The worsening global recession will likely limit inflation and minutes of the Federal Reserve's January meeting showed some policy makers saw a threat of broad declines in prices. ``It could be just a matter of time before we see a decline in core prices,'' Jonathan Basile, an economist at Credit Suisse Holdings in New York, said before the report. ``Inflation as a risk is at the bottom of the Fed's list of concerns. As long as we have rising unemployment, companies will be forced to keep prices low.'' Credit Suisse forecast a 2 percent gain in prices. The number of Americans collecting unemployment benefits jumped to 4.99 million two weeks ago, breaking a record for a fourth straight time, another report from Labor also showed. First-time applications for unemployment benefits were unchanged at 627,000 last week, higher than economists projected and signaling the job market is still deteriorating. Exceeds Forecasts Prices paid to factories, farmers and other producers were forecast to rise 0.3 percent, according to the median estimate of 72 economists in a Bloomberg News survey. Estimates ranged from a decline of 1.1 percent to a gain of 2 percent. Prices excluding food and fuel were projected to rise 0.1 percent, the survey showed. Companies paid 1 percent less for goods over the last 12 months, the biggest year-over-year drop since October 2006. Consumers are seeing the benefit of previous decreases in wholesale expenses. A Labor report tomorrow may show the cost of living index fell 0.1 percent in the 12 months ended January, the first year-over-year drop since 1955, according to the Bloomberg survey. Fed Bank of St. Louis President James Bullard this week said the U.S. faces a risk of ``sustained deflation,'' and called on the central bank to avert a decline in prices by expanding the money supply. Fed Concerns Many policy makers saw the risk of ``protracted,'' too-low inflation, while ``a few'' saw some risk of deflation, according to Fed minutes released yesterday. They also introduced a long- term inflation estimate, with most officials aiming to anchor public expectations at a 2 percent rate. In today's report, the gain in wholesale prices was led by a 3.7 percent increase in fuel costs. Passenger car prices rose 0.3 percent, communications gear jumped a record 1.3 percent and drug companies boosted prices by 1.1 percent for a second month. Costs of intermediate goods, those used in earlier stages of production, dropped 0.7 percent after declining 4.2 percent in December. Prices for raw materials, or so-called crude goods, fell 2.9 percent following a 5.3 percent drop. Crude oil on the New York Mercantile Exchange, which surged to a record $147.27 a barrel in July, plunged 71 percent to an average $42 in December. Oil costs stayed close to that level in January, and have slid further so far this month. ConocoPhillips, the third-largest U.S. oil company, is ``planning for a prolonged and difficult business environment,'' Chief Executive Officer Jim Mulva said on conference call with analysts last month. Losses Other producers are also hurting as falling demand pushes down prices. Celanese Corp., the world's largest producer of acetyls used in textiles and plastics, reported a fourth-quarter loss as prices for some of its products dropped. ``Historically weak market conditions drove a dramatic decline in overall global demand for many industries that we supply,'' Chief Executive Officer David Weidman said in a statement. Producer prices are one of three monthly inflation gauges reported by Labor. Prices of goods imported into the U.S. fell in January for a sixth consecutive month, the department said yesterday.

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