Wholesale Prices Rise Due to Higher Gas Costs

Christopher S. Rugaber,AP Economics Writer

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

The Labor Department said Thursday the Producer Price Index, which measures price changes before they reach the consumer, rose 0.7% in March. That's

down from 1.6% in February. The index has increased 5.8% in the past year.

Excluding volatile food and energy costs, prices rose 0.3% — the second highest increase in the past 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%. Still, core prices are only up 1.9% over the past year, a relatively

tame rate of inflation.

Gas prices jumped 5.7% 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%.

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 past 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 can't afford to pay the added costs.

Copyright 2011 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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