Energy Costs Lift Retail Sales and Producer Prices

Retail sales rose 0.5 percent in April, after a 0.9 percent increase in March. Excluding a 2.7 percent jump in gasoline sales reflecting higher prices, the increase in retail sales was a much smaller 0.2 percent.

Gasoline pump prices have been surging in recent months, with the nationwide average hovering near $4 a gallon. Economists are worried that higher fuel costs will leave motorists with less money to spend on other items, and that will slow the overall economy.

Sales at gasoline stations, which made up about 10.5 percent of total sales in April, increased 2.7 percent after rising 4.1 percent in March.

Higher energy costs helped push up prices paid by companies for raw materials and factory goods in April.

The Labor Department said that the Producer Price Index, which measures price changes before they reach the consumer, rose 0.8 percent last month. That was slightly above the 0.7 percent gain in March. Excluding the volatile food and energy categories, the core index increased 0.3 percent, the same as in March.

Over the last 12 months, the index has increased 6.8 percent, the biggest gain in nearly three years. Outside of food and energy, prices rose 2.1 percent, up from a 1.9 percent gain in March.

Turmoil in the Middle East and rising demand from fast-growing developing countries have pushed up the price of oil and gas since last summer. The prices of corn, wheat, cotton and other commodities have also increased because of strong global demand. That has raised worries among some economists that consumer prices could also rise and inflation could surge.

But some signs in recent days suggest that inflation pressures could cool in the coming months. Oil prices dropped on Thursday to nearly $96 a barrel on expectations that global demand would slow this year. The price was about $114 a barrel last week. Prices of corn and other grains fell on Wednesday.

Paul Dales, an economist at Capital Economics, said higher energy and agricultural commodity prices could push the 12-month increase in the Producer Price Index to 8 percent in the coming months. But he said it would be a temporary spike.

“With commodity prices now falling, both producer and consumer price inflation are likely to drop sharply in the second half of the year,” Mr. Dales said.

A separate report from the Labor Department showed that the number of people applying for unemployment benefits dropped last week, reversing nearly all the sharp rise reported the previous week.

The number of laid-off workers seeking benefits dropped 44,000, to a seasonally adjusted 434,000. That was the steepest weekly fall since February 2010.

The drop suggests that the increase of 47,000 reported last week was mostly because of temporary factors. Still, the latest applications figure is far above the 375,000 level typically consistent with sustainable job growth. Weekly applications peaked during the recession at 659,000.

The four-week average of claims, a less volatile measure, rose to 436,750, its fifth consecutive increase. The average has increased 46,500, or nearly 12 percent, since early April.

Many economists say a brighter outlook for hiring should blunt the impact of inflation. Companies have added 250,000 jobs each month, on average, in the last three months, the biggest hiring spree in five years. The unemployment rate has dropped nearly a full percentage point in the last five months.

More jobs are critical to increasing consumer spending, which accounts for about 70 percent of the economy.

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