Wholesale prices rose 0.5 percent in November, the government said Friday, reporting the first moderation of inflation since Iraq's invasion of Kuwait sent energy costs spiraling more than three months ago.
The rise in the Labor Department's Producer Price Index, which measures inflation of finished goods one stop short of retail, follows three months of steep increases.Prices rose 1.1 percent in October and August and 1.6 percent in September.
The November rise, although tame by comparison, still translates into a 6.1 percent annual inflation rate. And, it was substantially higher than the 0.1 percent to 0.3 percent increase anticipated by most economists.
In another economic report Friday, the Federal Reserve said industrial production weakened in November for the third straight month, falling back 1.7 percent to the lowest level since last January. It was the steepest decline since output in manufacturing plunged 2.0 percent in December 1982 as the nation began crawling out of the last recession.
For the year so far, wholesale prices have risen at a 6.9 percent annual rate, compared with 4.9 percent for all of 1989.
In November, energy prices rose a scant 0.1 percent, after soaring 8 percent in October, 13.8 percent in September and 9 percent in August.
Gasoline prices fell 2.6 percent and fuel oil dropped 7.3 percent. However, natural gas costs, which had been largely unaffected by Persian Gulf turmoil, rose 5 percent.
Food prices rose 0.8 percent last month following a 0.9 percent jump in October.
The department said fresh and dried vegetable prices leaped 12.3 percent and fish prices were up 8.1 percent. Costs also rose for fresh fruit, rice, beef, pork and sweets. Prices fell for eggs, dairy products, chickens and turkeys, pasta and shortening and cooking oils.
Prices excluding the volatile food and energy categories - considered a better barometer of underlying inflationary pressures by most economists - rose 0.5 percent after no change in October.
Until today's inflation report, most economists believed that Federal Reserve policy-makers, meeting Monday, would stimulate the economy with another cut in interest rates before the end of the year. However, the Fed has nudged short-term rates lowers three times since early November and may hesitate to cut them again if inflation worries persist.