Friday, April 23, 2010

Food Prices Surge Most In 26 Years


Wholesale prices jump 0.7% on higher food prices

WASHINGTON (MarketWatch) -- Higher prices for vegetables helped drive U.S. wholesale prices higher by a seasonally adjusted 0.7% in March, reversing a drop in February, the Labor Department estimated Thursday.
The producer price index has risen by 6% in the past year, led by a 23% rise in energy prices, the government agency said. It's the largest year-over-year gain since September 2008.
Excluding often-volatile food and energy prices, the core PPI increased 0.1% in March and is up 0.9% compared with a year earlier.
The big story in the March PPI was wholesale food prices, which rose 2.4%, matching the biggest gain in 26 years. Prices of fresh and dried vegetables soared 49.3%, the most in 16 years. Prices of seafood, meat and dairy goods also rose. But prices of processed foods were unchanged.
Wholesale food prices are up 6.8% in the past year.
At the retail level, however, food price inflation was muted in March, according to the consumer price index reported last week. Retail prices for food to be consumed at home rose 0.5%.
Wholesale energy prices rose 0.7% in March, led by a 2.1% gain in gasoline prices and a 1.9% rise in home heating oil.
Prices of capital equipment were unchanged in March. Prices of passenger cars at the wholesale level fell 1.1%.
Federal Reserve officials have largely ignored the PPI, saying that inflation at the more-important consumer level is expected to be modest for the next few years, given the considerable slack in the economy that saps the ability to raise prices at will. Prices of commodities -- such as food, energy, metals, plastics and chemicals -- are sensitive to global growth patterns, weather and temporary supply disruptions.
Higher commodity prices were evident in other gauges measuring inflationary pressures along the supply chain.
Prices of crude materials rose 3.2% in March, led by higher prices for metals, energy and foodstuffs.
Prices of intermediate goods -- partially processed -- rose 0.6% in March, led largely by higher prices for metals and chemicals. Intermediate energy goods prices rose 0.4%, while intermediate foodstuffs prices fell 0.5%.
The core intermediate PPI -- considered a good gauge of inflationary pressures - rose 0.7% in March and is up 4% in the past year.

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