May 19, 2024

Higher Energy Costs Push Up Producer Prices

WASHINGTON (AP) — More expensive gas, cars and furniture pushed wholesale prices higher last month.

The Labor Department said Thursday that its Producer Price Index, which measures price changes before they reach the consumer, rose 0.7 percent in March. That was down from a 1.6 percent rise in February. The index has increased 5.8 percent in the last year.

Excluding food and energy, the core index rose 0.3 percent in March — the second highest increase in the last year.

The price of new cars rose by the most in nearly two years, while the cost of some types of furniture jumped 6.5 percent. Still, core prices are only up 1.9 percent over the last year, a relatively tame rate of inflation.

Higher energy prices accounted for nearly all of the March increase. Gas prices jumped 5.7 percent in March. Food prices dipped last month, after soaring by the most in 36 years in February because of a harsh winter freeze that raised the cost of fresh vegetables. Egg prices dropped 20 percent.

Economists say rising oil and gas prices could slow the economy, leaving consumers with less money to spend on other goods. But average hourly pay has only risen 1.7 percent in the last year, a fact that is likely to keep inflation from spreading.

Employers have little incentive to raise pay when the unemployment rate is high. But businesses are also unlikely to raise prices by much if they sense people cannot afford to pay the added costs.

The government also reported Thursday that more people applied for unemployment benefits last week, the first increase in three weeks. Still, the broader trend points to a slowly healing jobs market.

Applications for unemployment benefits rose 27,000 to a seasonally adjusted 412,000 for the week that ended April 9. That left applications at their highest point since mid-February.

Applications near 375,000 are consistent with a sustained increase in hiring. Applications peaked during the recession at 659,000.

The four-week average of applications, a less volatile measure, rose to 395,750. Applications have dropped by about 6 percent over the last two months.

Companies added more than 200,000 jobs in March for a second month, the first time that has happened since 2006. The unemployment rate fell to a two-year low of 8.8 percent and has dropped a full percentage point since November.

However, a more sobering reason for the drop is that the number of people who are either working or seeking a job is surprisingly low for this stage of the recovery. People without jobs who are not looking for one are not counted as unemployed.

The number of people collecting benefits fell to 3.68 million during the week ended April 2, one week behind the applications data. That was the lowest total since late September 2008.

That does not include millions of people receiving aid under the emergency unemployment benefits programs put in place during the recession.

Overall, 8.5 million people received unemployment benefits in the week ending March 26, the latest data available. That was down slightly from the previous week.

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