MW: U.S. wholesale prices rise slightly in January
Higher prices for pharmaceutical drugs, small trucks, appliances
By Jeffry Bartash, MarketWatch
WASHINGTON (MarketWatch) — U.S. wholesale prices rose slightly in January, spurred by higher costs of pharmaceutical drugs, but food and fuel prices fell.
The producer price index rose a seasonally adjusted 0.1% last month, the Labor Department said Thursday. Economists surveyed by MarketWatch had predicted a 0.5% increase, largely because of rising gasoline prices.
Yet a 2% increase in wholesale gasoline prices last month was more than offset by a drop in the cost of electricity and home-heating fuels, a result of unseasonably warm winter weather. Overall energy costs fell 0.5% in January.
The wholesale cost of food, meanwhile, fell 0.3% in January, primarily because of lower prices for fresh and dry vegetables.
Minus those two categories, so-called core wholesale prices rose a surprisingly sharp 0.4%. That was double the MarketWatch forecast for a 0.2% increase.
The core index is viewed by the Federal Reserve as a more accurate gauge of inflationary pressure because it excludes the volatile food and energy categories.
The rise in the core rate was generated mainly by higher costs of pharmaceutical drugs, light trucks and appliances, the government said.
Pharmaceuticals jumped 2.0% in January while the price of appliances surged 1.5% — the biggest one-month increase in 31 years. Appliance makers usually raise their prices at the beginning of the year.
Light truck prices rose 0.9% at the wholesale level.
Sustained increases in wholesale costs often translate into higher prices of consumer goods and services, but the relationship is not exact. Companies sometimes absorb temporary increases in the cost of materials to maintain market share in a competitive market.
Wholesale costs have risen 4.1% over the past 12 months, but that’s the lowest year-over-year increase since January 2011. Core prices have risen a slower 3.0% in the past 12 months.
The price index for intermediate goods, such as the cloth used to make clothes or stamped metal parts used in heavy machinery, fell 0.4% last month.
Crude prices — the cost of raw materials — jumped 1.5% in January.
