GAS, OIL BOOST PRODUCER PRICES

                         Roanoke Times
                 Copyright (c) 1995, Landmark Communications, Inc.

DATE: FRIDAY, April 9, 1993                   TAG: 9304090197
SECTION: BUSINESS                    PAGE: A-7   EDITION: METRO 
SOURCE: Associated Press
DATELINE: WASHINGTON                                LENGTH: Medium
GAS, OIL BOOST PRODUCER PRICES
Prices paid to farmers, factories and other producers jumped a worrisome 0.4 percent in March, driven up by a blip in gasoline and fuel oil prices, the government said Thursday. Economists warned that the best news on inflation was over.
Much of the March increase in the Labor Department's Producer Price Index was attributed to special factors, including energy costs and a pre-Easter rise in egg prices.
That left the increase in so-called core prices - excluding the volatile food and energy sectors - at 0.1 percent in March.
The financial markets were "very happy because core inflation was up only one-tenth," said economist Paul W. Boltz of T. Rowe Price and Associates, a mutual fund company in Baltimore. "But I'm less than happy because I do eat and I also drive a car and heat my home."
Analysts said inflation wasn't in any danger of roaring out of control, nevertheless they said the economy probably has strengthened enough to rule out improvements in inflation.
Producer prices also rose 0.4 percent in February following a 0.2 percent increase in January.
Taken together, the first three months of the year represent an annual inflation rate of 3.9 percent, the worst rate in any quarter since the final three months of 1990 and more than double the 1.6 percent rise for all of last year.
Boltz said he expects producer price inflation of about 2 percent for all of this year and consumer price inflation of about 3.4 percent, up from 2.9 percent in 1992.
"Inflation is not dead. It's not zero. It's a solid 3 percent and looks to be going up. At 3 percent inflation, prices double every 24 years," he said. "The message here is that the best news on inflation is behind us, but the deterioration will be very gradual."
The Labor Department is scheduled to report today the consumer price index for March, the government's measure of inflation at the retail level.
March's producer price increase was driven by a 1.3 percent jump in energy prices on top of a 1.7 percent gain in February. Gasoline prices rose 2 percent; heating oil, 8.5 percent; and natural gas, 1.5 percent.
Egg prices jumped 12.6 percent and fish prices 11.3 percent, the worst since last June. However, fruit prices fell 6.1 percent and vegetable prices declined 0.5 percent.
The price of snap beans shot up 101.7 percent, but radishes were down 50 percent, squash 46.6 percent, cucumbers 41.3 percent and strawberries 21.2 percent.
Over-the-counter drugs fell 1.4 percent. New-car prices rose 0.4 percent, as did tobacco.

by Bhavesh Jinadra by CNB