U.S. Wholesale Prices Rise 1.8%

Surging energy prices fuel November increase.

Surging energy costs lifted wholesale prices by 1.8% in November, government data showed Tuesday, highlighting the volatility of inflation in recent months.

The Labor Department's producer price index (PPI) was driven by a 6.9% jump in finished energy prices including a 14.2% rise in gasoline costs.

Food prices rose a sharp 0.5% in the month.

Excluding food and energy, the so-called core PPI was up 0.5%.

Analysts had expected a 0.8% rise in the headline PPI and a 0.2% increase in the core index.

The rise in prices comes amid ongoing fears about inflation as well as deflation.

Though overall inflation has been tame, it has allowed the Federal Reserve to keep rates low to help lift the economy out of its malaise.

Some analysts believe the recession could lead to a crippling cycle of deflation that crimps a recovery, while others fear that low rates could over time fuel a new surge in inflation that will be difficult to contain.

Over the past 12 months, wholesale prices are up 2.4%, reversing a period of declining prices for the first time in a year.

Copyright Agence France-Presse, 2009

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