WASHINGTON (Reuters) - U.S. wholesale prices unexpectedly posted their biggest gain in seven months in October as food prices rose sharply and car prices spiked with the introduction of new models, according to a government report Friday.
But stripping out those outsized gains, prices for wholesale goods were mostly well contained.
The Producer Price Index, which measures prices paid to farms, factories and refineries, shot up 0.8 percent last month, the Labor Department said.
A 2.2 percent increase in food prices, the largest since January 1984, accounted for much of the gain. Energy prices slipped 0.1 percent.
The so-called core rate, which strips out volatile food and energy prices, increased a sharp 0.5 percent. But the introduction of new vehicle models, and associated price increases, played a major role in pushing the index higher.
The department said the core PPI was up just 0.2 percent excluding sharply higher vehicle prices. Car prices rose 1.6 percent and prices for small trucks and SUVs soared 3.4 percent, their biggest jump since October 1985.
The report was at odds with expectations on Wall Street, where economists had expected overall producer prices to rise just 0.2 percent with the core rate up 0.1 percent.
Prices for beef and veal climbed 18.3 percent, the biggest gain since January 1974. The department said that if that price gain were excluded, the overall PPI would have been up just 0.5 percent.
Analysts were likely to eye the report closely for any clues to what it portends for inflation at the consumer level.
The department releases the October consumer price index next week. Analysts had been expecting the CPI and the index excluding food and energy to both rise to rise 0.1 percent.
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