Inflation slows, but trends troubling

WASHINGTON - Wholesale inflation slowed in April after a big jump in March - but the improvement is likely to be temporary as consumers will be battered in coming months by price increases for gasoline, food, and a host of other items.

Most worrisome, analysts said, were indications that surging energy and food costs had spread to other parts of the economy, causing broader inflation problems.

For April, wholesale inflation was up 0.2 percent, the Labor Department reported yesterday, after a 1.1 percent jump in March.

While that was lower than expected, the closely watched core inflation reading, which excludes energy and food because they are volatile, jumped 0.4 percent, double what had been expected. Over the last 12 months, core inflation has risen 3 percent, the highest reading in more than 16 years.

The pressures in April came from several areas, with the prices of new cars, toys and pharmaceutical products showing increases. Also, commercial furniture prices rose by the largest amount in 27 years. Analysts said some of this was probably due to the weaker dollar, which is driving up the cost of imports.

Consumers, already struggling with high gasoline prices and rising food bills, could now start to see increases in these other areas as well, economists said.

"We can see a steady spreading of wholesale price increases into the more general economy," said Joel Naroff, chief economist at Naroff Economic Advisors in Holland, Pa. But he said the weak economy might restrain the pressures now building.

He said businesses might end up taking a hit to their profit margins because of the higher cost to produce goods rather than being able to pass these costs on to consumers.

For April, food prices were unchanged, reflecting wide cross-currents, with the price of eggs and vegetables showing big declines while rice jumped 17.4 percent, the biggest one-month gain in more than 14 years. The cost of pasta, chicken and dairy products also posted big increases.

The higher prices of certain foods have been blamed on a variety of factors, from rising global demand to higher energy prices pushing up transportation costs and the diversion of cropland to the production of corn for ethanol.

Wholesale energy prices fell 0.2 percent in April after a 2.9 percent surge in March.