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Producer prices jump 0.5%
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February 18, 1999: 9:08 a.m. ET
January gain is biggest in a year, but core rate shows a 0.1% dip
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WASHINGTON (CNNfn) - Wholesale prices were up 0.5 percent in January, the biggest gain in a year, but the core inflation rate, excluding food and energy prices, declined 0.1 percent, the U.S. Labor Department said Thursday.
Analysts expected the overall producer price index to rise by just 0.1 percent. But they also had expected the core rate to rise -- rather than fall -- by that same 0.1 percent rate.
The increase follows a 0.4 percent rise in the overall December PPI, and a 1 percent rise in the core rate. The overall rate increase was the biggest since last January, when the PPI rose 0.6 percent.
The overall rate increase "basically doesn't count," said Rosanne Cahn, chief economist at CS First Boston. She said the core rate is the number to pay attention to, showing that "there are a lot of anti-inflationary forces, disinflationary forces, affecting the economy."
Food prices, up 1.6 percent, and energy prices, up 1.8 percent, posted their biggest gains in more than a year. But Cahn said the prices have been weak, and are expected to remain so through most of 1999.
The Treasury market turned lower after the 8:30 a.m. ET release. The 30-year bond was down 1/32 to 99-1/32, yielding 5.31 percent; before the report, the bond was up 5/32. 
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