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

DATE: THURSDAY, May 13, 1993                   TAG: 9305130149
SECTION: BUSINESS                    PAGE: B8   EDITION: METRO 
SOURCE: Associated Press
DATELINE: WASHINGTON                                LENGTH: Medium

DON'T TAKE PRICE JUMP TOO SERIOUSLY

Wholesale prices - a measure of inflation one step before ot reaches consumers - rose an unexpectedly sharp 0.6 percent in April, but analysts said the biggest jump in 2 1/2 years was not broad-based and probably did not signal a resurgence of inflation.

Half the increase was in food, including a weather-related 44.7 percent spike in vegetable prices that is not likely to be repeated, observed economist Stephen S. Roach of Morgan Stanley & Co.

Economist Lynn Reaser of First Interstate Bancorp in Los Angeles agreed the increase "was heavily affected by weather," including rain in Arizona and California where much of the nation's winter produce is grown.

"I would expect overall inflation to subside during the remainder of the year," she said.

In its report Wednesday, the Labor Department said the 0.6 percent jump in its Producer Price Index was the largest since wholesale prices shot up 1 percent in October 1990. It followed increases of 0.4 percent in both February and March. Many analysts had predicted a rise of just 0.2 percent.

The 1.4 percent rise in food prices was the largest since they jumped 1.6 percent in January 1990. But energy costs, also subject to wide swings, rose just 0.1 percent after a 1.3 percent surge in March.

The "core rate" of wholesale inflation, which excludes the volatile food and energy categories, increased 0.4 percent, the biggest since an identical 0.4 percent gain last May.

But analysts said a 1.1 percent increase in automobile prices and a 1.4 percent advance in tobacco costs, neither of which is expected to continue, were mainly responsible for the boost in the core rate. Excluding those, the core would have risen just 0.2 percent. Wholesale prices rose at a 4.7 percent annual rate in the first four months of the year, compared to 1.6 percent for all of last year. They dropped 0.1 percent in 1991, the first since 1986, after rising 5.6 percent in 1990.

Pacing the 44.7 percent jump in vegetable costs were prices of lettuce, onions, eggplants and green peppers, which more than doubled, and tomatoes, which nearly doubled.

Home heating oil prices fell 6.7 percent after climbing 8.5 percent a month earlier. Gasoline fell 0.4 percent after a 2 percent rise. Natural gas was up 0.6 percent, less than half of March's 1.5 percent jump. Electricity costs rose 0.4 percent.

Most clothing categories declined - women's apparel, 0.2 percent; men's and boy's, 0.1 percent, and girls', children's and infants', 0.6 percent. Footwear, on the other hand, inched up 0.1 percent.

Prescription drugs jumped 1 percent.

The changes left the Producer Price Index, unadjusted for seasonal variations, at 125.3 in April, compared with 122.4 a year earlier. That means a market basket of goods that cost $122.40 a year ago would have cost $125.30 last month.

by CNB