Wholesale level inflation soared in November by the largest amount in more than 30 years, as gasoline prices rose along with a number of other items. The Producer Price Index, which measures inflation before it reaches consumers, rose a full 2 percent last month, the biggest increase since November 1974, the Labor Department reported Tuesday. Economists had been expecting a rebound in wholesale prices after two months of big declines. However, the 2 percent jump was four times bigger than the 0.5 percent increase they had forecast. Even excluding energy and food prices, core inflation rose 1.3 percent, the biggest jump in 26 years. In other economic news, construction of new homes and apartments increased by 6.7 percent in November to a seasonally adjusted annual rate of 1.588 million units. That news, however, was tempered by figures showing that applications for permits to build new homes fell for a tenth consecutive month. The wholesale prices report came just a week after figures indicating that consumer prices were flat in November, the third straight month of price relief at the retail level. The discrepancy seems to be the result of energy costs, which fell in the consumer survey but were up 6.1 percent in the November survey of wholesale prices. The rise in wholesale energy costs was led by a 17.9 percent jump in gasoline prices, the biggest increase since June 2000. Other energy sources, including natural gas for home use, home heating oil and diesel fuel costs also posted big gains at the wholesale level. The sharp increase in wholesale inflation is likely to spark fears of interest rate changes. Federal Reserve officials last week left interest rates unchanged at their final meeting of the year but said they continued to be worried about inflation pressures. The 1.3 percent rise in core wholesale inflation, which excludes energy and food, followed a big 0.9 percent drop in October and was the biggest one-month gain since a similar 1.3 percent rise in July 1980. The increase in the core rate of inflation was led by a record 13.7 percent jump in the price of light trucks, a category that includes sport utility vehicles. The price of new passenger cars rose by 2.2 percent.
