clarinews@clarinet.com (VINCENT DEL GIUDICE, UPI Business Writer) (02/09/90)
WASHINGTON (UPI) -- Wholesale prices surged by 1.8 percent in January in the biggest jump since the 1974 energy crisis, fueled again by a huge increase in oil and gasoline prices, the government said Friday. Vegetable prices also took a beating and analysts placed the blame on the brutal winter weather, predicting moderate inflation for the year. The Labor Department said the ``unusually large'' 13.6 percent increase in energy prices was the steepest since the government started tracking wholesale gasoline and oil prices in 1974. The overall increase in the producer price index was the largest since 2 percent in November of that year in the wake of the Arab oil embargo. The index stood at 117.5, which means that an item that cost $100 wholesale in 1982 cost $117.50 last month. But economist Robert Dieli, of Northern Trust Bank in Chicago, said automotive and other major categories in the report showed ``there was very little to indicate that inflation was heating up.'' Fuel oil prices zoomed 25.3 percent and gasoline prices jumped by 16.7 percent in January, accounting for most of the energy price surge. Natural gas was up 3.2 percent. A 2.1 percent jump in food prices also contributed to the January surge, following an overall 0.6 increase in the index in December, 0.1 percent increase in November, and 0.5 percent increase in October, the department said. Those numbers were revised to reflect updated data. If America's wholesale prices -- which influence prices consumers pay -- continued to gain at the current rate, the producer price index would finish the year with a behemoth 24.1 percent increase, the Labor Department said. But the January surge appeared to a one-time shot. ``We had the cold weather hit and nobody in the northeast was prepared for it,'' said professor Donald Ratajczak, director of the economic forecasting center at Georgia State University. ``All the homes had low (oil) tank levels. They thought we were going to have another mild winter,'' Ratajczak said. ``They all scrambled to buy fuel oil and the price rocketed.'' The cold also wiped out crops in critical winter growing regions in Florida and the Rio Grande and caused equipment failures at several refineries, he said. A crippling fire at a major fuel oil refinery also hurt production. Aside from the traditionally volatile energy and food prices, the index for other finished goods edged up by only 0.1 percent in January, following a 0.5 percent increase in December. On food shelves, prices for vegetables broke a wholesale record in January -- a rocketing rise of 58 percent for cabbage, for example -- with the cost of cabbage, lettuce and tomatoes more than doubling, the department said. ``Prices also turned up after falling in the previous month for fish, soft drinks, fresh fruits and pork,'' the Labor Department said. Otherwise, the prices for passenger cars and light trucks declined as did the cost of tires. Tobacco costs were also down and wholesale prices slowed considerably for prescription drugs, soaps and detergents, cosmetics, periodicals, and household appliances, the department said. But wholesale prices for children's clothes, alcoholic beverages and household glassware turned up after falling in December, the monthly report said.