The biggest surge in food costs in more than six years pushed wholesale prices up by 0.2 percent in June despite the fact that energy prices actually fell last month.
The Labor Department reported today that its Producer Price Index, which measures price pressures before they reach the consumer, turned up again in June after having fallen by 0.1 percent in May.The 0.2 percent June advance in wholesale prices was higher than analysts had been expecting and was likely to lead to further unease in financial markets that the Federal Reserve will soon be forced to boost interest rates to dampen inflationary pressures.
Rate jitters and disappointing earnings reports have contributed to two big declines in stock prices in just the past week. Some analysts have begun to wonder whether the strong bull market of the 1990s is finally beginning to run out of steam.
Food prices jumped 1.6 percent in June as sharp increases in both beef and pork prices led to the biggest surge in food prices in the PPI since January 1990.
Energy costs, which had been soaring this year, retreated in June, dropping by 2.1 percent, the biggest decrease since December 1993.
The 0.2 percent June rise left wholesale inflation running at an annual rate of 2.2 percent so far this year. This actually marked a slowdown from a 3 percent annual rate turned in during the last half of 1995.