WASHINGTON – Companies paid more for raw materials and factory goods in April, mostly because energy prices jumped for the seventh straight month.
The Producer Price Index, which measures price changes before they reach the consumer, rose 0.8 percent last month, the Labor Department said. That's slightly above the 0.7 percent gain in March. Excluding the volatile food and energy categories, the core index increased 0.3 percent, the same as in the previous month.
Over the past 12 months, the index has increased 6.8 percent, the biggest gain in nearly three years. Outside of food and energy, prices rose 2.1 percent, up from a 1.9 percent gain in March.
Turmoil in the Middle East and rising demand from fast-growing developing countries have pushed up the price of oil and gas since last summer. The costs of corn, wheat, cotton and other commodities have also jumped due to strong global demand. That's raised worries among some economists that consumer prices could also jump and inflation could surge.
But some signs in recent days suggest that inflation pressures could cool in the coming months. Oil prices dropped Thursday to near $96 a barrel due to expectations that global demand will slow this year. The price was about $114 a barrel last week. Prices of corn and other grains also fell Wednesday.
Paul Dales, an economist at Capital Economics, said higher energy and agricultural commodity prices could push the 12-month increase in the index to 8 percent in the coming months. But he said it would be a temporary spike.
"With commodity prices now falling, both producer and consumer price inflation are likely to drop sharply in the second half of the year," Dales said.
Sharp increases in the prices of tires and civilian aircraft helped push up the core index. Civilian aircraft prices rose by the most in nearly seven years, and the cost of tires soared 4.8 percent, the most in nearly 37 years.
Passenger car prices rose 0.5 percent. Part of the reason was demand increased. But the Japan's earthquake and tsunami may have also slowed the production of cars. That prompted some automakers to phase out rebates, leading to higher prices, according to economists at Deutsche Bank.
Food prices rose 0.3 percent last month, after falling in March. Egg prices rose by nearly 57 percent, the most on record, and the cost of fresh fruit and beef and veal also moved up.