Wholesale prices jumped 0.7 percent in December to boost inflation for 1989 to 4.8 percent, the worst showing in eight years, the government said Friday.
The gain in the Labor Department's Producer Price Index for finished goods, one stop short of retail, topped last year's rate of 4 percent and more than doubled the 1987 rate of 2.2 percent.It marked the third consecutive year that price increases have accelerated and was the steepest rise since the index shot up 7.1 percent in 1981.
The annual number for 1989 masked a roller-coaster ride that had prices rising at better than a 9 percent annual rate in the first five months of the year, slowing to a 1 percent annual rate from June through November and then soaring again in December.
Prices had fallen 0.1 percent in November and risen 0.4 percent in October. As with inflation early in the year, wholesale price gains in December were fueled by a steep rise in the energy sector, where prices rose 1.4 percent for the month and 9.6 percent for the entire year.
The deep freeze that gripped much of the nation last month helped boost fuel oil prices 7.1 percent and natural gas costs 1.6 percent. Gasoline prices were unchanged after falling 7.1 percent in November. For the year, fuel oil was up 33.9 percent, the biggest rise since 1979 when fuel oil prices rose 70.5 percent. Gasoline rose 9.2 percent for the year and natural gas, 3.5 percent.
The cold also played a role in food costs last month, which rose a moderate 0.5 percent overall. Vegetable prices shot up 4.1 percent and egg prices rose 4.7 percent. But those gains were somewhat offset by substantial price drops for pasta, pork, turkey and shortening and cooking oil. Food inflation for the year was 5 percent, an improvement over 5.7 percent in 1988, when a summer drought seared the nation's farm regions.
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Inflation look
Wholesale price increases through selected years:
1955 - 1 percent
1959 - decline of 0.3 percent
1960 - 1.8 percent
1961 - decline of 0.6percent
1965 - 3.3 percent
1970 - 2.1 percent
1973 - 11.7 percent
1974 - 18.3 percent
1975 - 6.6 percent
1980 - 11.8 percent
1985 - 1.8 percent
1986 - decline of 2.3
1987 - 2.2 percent
1988 - 4 percent