Price hike draws inflation concerns

Higher cost of food, gasoline drive index to largest increase in year

? Wholesale prices, stoked by higher costs for gasoline and food, registered their biggest rise in a year during April, providing fresh evidence that inflation is awakening after a long slumber.

The Labor Department reported Thursday that the Producer Price Index, which measures the prices of goods before they reach stores, rose by 0.7 percent last month, following a 0.5 percent gain in March.

“There’s not an inflationary storm on the horizon, but there is definitely a cloudy inflationary sky,” said Stuart Hoffman, chief economist at PNC Financial Services Group. “Inflation is becoming a bit of a nuisance after being quite tame and basically a nonfactor for the past year or more.”

April’s increase was the largest since a 1.3 percent increase in March 2003 and topped the 0.3 percent advance that economists were forecasting. Higher prices for energy and food were the culprits of the gauge’s increase last month.

Excluding energy and food prices, the core rate of inflation rose in April by 0.2 percent for the second straight month, in line with analysts’ expectations.

An improving economic climate is giving some companies more power to raise prices, which many were hard-pressed to do when the economy was in a long slump.

Energy prices rose 1.6 percent in April, compared with 0.6 percent in March. Gasoline prices went up 3.4 percent. Residential natural gas prices rose 2.5 percent and residential electric power costs increased 0.4 percent. Home heating oil, however, fell 1.3 percent.

Food prices rose 1.4 percent in April, on top of a 1.5 percent increase in March. More than half of April’s increase was due to a 10.4 percent jump in prices for dairy products, the biggest rise since July 1946, the government said.

Prices for beef and veal, soft drinks and pork also were higher.