Wholesale prices rose more rapidly in July than they have in 15 months, led by advances in energy and coffee costs, the government said Thursday.
The Labor Department reported that its Producer Price Index, which measures inflation pressures before they reach the consumer, rose 0.5 percent last month - matching the gain of April 1993. The largest previous jump was 1.1 percent in October 1990.But for the first seven months of this year the index climbed a moderate 2.2 percent at an annual rate and was up a mere 0.6 percent for the past 12 months.
In another report, the government said retail sales slipped 0.1 percent in July, held back largely by a drop in automobile purchases, the government said Thursday. The Commerce Department said sales totaled a seasonally adjusted $184.8 billion, down from a revised $184.9 billion in June. The June figure originally was estimated to be $183.8 billion.
And the Labor Department said the number of Americans seeking state unemployment benefits rose moderately last week after dropping the previous two weeks. The department said initial jobless claims totaled a seasonally adjusted 321,000 in the week ended Aug. 6.
The inflation performance was a little higher than the predictions of most analysts. They said even a moderate acceleration increases the likelihood the Federal Reserve will raise short-term interest rates next week, the fifth boost since February.
"I think the prices are going to come in on the higher side," said economist Robert Dederick of the Northern Trust Co. in Chicago in advance of Thursday's report. "That will give them the support they need for the pre-emptive actions they are seeking."
Most analysts estimated ahead of the report that wholesale prices were up 0.4 percent in July.
The wholesale price gauge was unchanged in June after declining 0.1 percent in May and remaining unchanged in April.
Excluding more volatile food and energy prices, the index rose just 0.1 percent in July after slipping 0.1 percent in June.
Energy prices rose 2.5 percent last month as Americans turned up the air conditioning in homes and at work and paid more for gasoline at the pump. It was the biggest gain for energy costs since they rose 2.8 percent in February. In June, they increased 0.3 percent.
Gasoline prices jumped 8 percent in July, the largest increase in nearly four years, while heating oil rose 6.4 percent.
Coffee prices zoomed 42.8 percent last month as frost depleted the Brazilian crop.
The Labor Department is scheduled to announce consumer prices for July on Friday.
While inflation has been restrained, many analysts expect it to pick up because some commodity prices already are higher and the latest government figures indicate worker shortages are possible,
Food prices rose 0.5 percent in July after remaining unchanged the previous month.
Prices for red meats, chicken and vegetables all were down in July. But fish prices rose 2.3 percent. Wholesale fruit prices were up 1.5 percent.
Passenger car prices were up 0.8 percent following a 0.3 percent advance in April. Tobacco products posted a 1.9 percent gain after decreasing 0.9 percent.
Inflation has been mild for more than three years, the best stretch in three decades. The cost of living was up 2.7 percent last year, following a 2.9 percent rise in 1992 and 3.1 percent in 1991.
The Federal Open Market Committee, the central bank's policy-making body, meets Tuesday, and many analysts expect it to boost the target rate banks charge each other for overnight loans. The Fed has raised rates four times since February to stifle inflation, increasing them from 3 percent to 4.25 percent.