By Josh Boak
WASHINGTON: The prices companies receive for goods and services jumped in March, led by gains for food, clothing, jewelry and chemicals. The producer price index, which measures price changes at the wholesale level, rose 0.5 percent, the Labor Department said Friday.
Overall inflation remains relatively tame. Producer prices increased 1.4 percent during the past 12 months.
Wholesale food prices rose last month, led by a 30.4 percent leap in the costs of hogs and 12.4 percent increase in poultry.
Those increases were partially offset by a 2.4 percent decline in gasoline and a 0.7 percent drop for electric power.
Excluding the volatile categories of food, energy and retailer and wholesaler profit margins, core prices ticked up 0.3 percent.
Some of the higher prices were due to a “distortion caused by the unusually bad weather” in previous months, said Paul Dales, senior U.S. economist at Capital Economics. The margins of clothing wholesalers and retailers bounced back in March, rising by 3.3 percent to push up overall producer prices.
Inflation has been near historic lows during the past two years. The producer price index rose just 1.2 percent in 2013 after a 1.4 percent increase in 2012. Both figures are far below the Federal Reserve bank’s preferred target of 2 percent.
Stronger growth usually leads to higher levels of inflation. But the economy has struggled to accelerate during the 4½-year recovery from the Great Recession. Wage growth has been close to flat, while unemployment remains at historically high levels. This limits consumer spending and limits the ability of businesses to raise prices.
The economy has started to improve after a winter slowdown. Employers added 192,000 jobs in March and 197,000 in February, according to a government report issued last week.