Wholesale Prices Register Biggest Increase In Nine Months.

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Economy

Inflation at the wholesale level increased by the largest amount in nine months in July, reflecting the hit consumers are taking in rising gasoline prices. The Labor Department reported that its Producer Price Index jumped by 1 percent in July, the biggest advance since a 1.5 percent increase last October. The report on wholesale prices depicted many of the same price pressures shown in the 0.5 percent increase in consumer prices reported Tuesday. However, the wholesale report showed that the core rate of wholesale inflation â€" excluding energy and food â€" rose by a worrisome 0.4 percent in July, the biggest increase since January.

Core inflation at the retail level rose by a much more modest 0.1 percent in July. The biggest difference in the two reports was in the measurement of new car prices. Car prices fell by 1 percent in the report on inflation at the consumer level, while car prices were up 1.5 percent in the wholesale price report. According to the Associated Press, analysts explained the difference by saying that the wholesale report, which measures inflation at an earlier stage in the supply chain, caught the introduction of attractive incentive offers in June â€" while the consumer price report did not pick up those sales incentives until the July report. The wholesale price report showed that energy prices rose by 4.4 percent in July, following a 2 percent increase in June. Gasoline prices were up 10.9 percent, the biggest surge since a 12.8 percent rise last October. Analysts caution that motorists should be braced for another large increase in gasoline costs in August, reflecting the fact that gasoline prices have continued to rise in recent weeks as oil prices have surged above $66 per barrel.