Energy Costs Spur Increase in Producer Prices; Analysts Say Recovery Not Threatened
One important measure of U.S. inflation rose sharply last month as the surge in world oil prices since mid-January began to work its way through the economy, the Labor Department reported yesterday.</br></br>Producer prices for finished goods rose 1 percent last month, the largest monthly increase since the beginning of last year, principally because of a 5.5 percent jump in energy prices. That included a 21.3 percent increase in the prices refiners charge for gasoline following a 4.5 percent rise in February.</br></br>However, the rising cost of energy -- evident in recent weeks to motorists at the gas pump -- so far does not appear large enough to derail the U.S. economic recovery. It would take a much larger and more sustained oil price shock to seriously damage the economy, partly because it is significantly less dependent on oil than in the past, analysts said.</br></br>Moreover, in the past 10 days, world oil prices have fallen by nearly $4.50 a barrel, erasing more than half of the increase that began earlier this year.</br></br>By one measure, crude oil prices peaked this year at just under $28 a barrel 10 days ago, driven upward largely by rising tensions in the Middle East, the prospect of growing oil demand because of the U.S. economic rebound and the possibility of disruptions in oil shipments from Venezuela because of political turmoil there.