PPI Rises 0.3% in January; Core Prices Surge 0.8%

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holesale prices rose 0.3% in January, but prices excluding food and energy rose 0.8%, the largest increase since December 1998, the Labor Department reported Friday.

Labor also said the wholesale price of heavy trucks over 14,000 pounds rose 1.6%, which Bloomberg said was most since September 1998.

The overall increase in producer price index, which measures prices paid to factories, farmers and other producers, followed a 0.3% decline the month before.

An increase in the PPI could indicate strong demand for goods, which would mean more shipments for trucking companies. However, if inflation begins to accelerate too quickly, it could also hurt the economy.

Labor said core producer prices rose 2.7% in January from the same month a year earlier, the biggest rise since November 1995.

The report found that passenger car prices increased 1.2% in January, the most since March 2003, following a decrease of 0.1%.

Cigarette costs rose 3.4% last month, the most since April 2002. Excluding tobacco, the core PPI increased 0.7%.

Energy prices fell 1% last month after falling 2.5% in December, Labor said. Gasoline prices dropped 4.2% and food prices fell 0.2%.

Prices for capital equipment rose 0.6%, but computer prices plunged 6.1% last month, the most since August 2001, Labor said.

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