WASHINGTON – A spike in the cost of gasoline pushed wholesale prices higher in March, a trend that could limit consumer spending in the coming months.

Still, most economists don’t expect that will lead to widespread inflation because businesses are wary of raising prices when most people aren’t getting significant pay increases.

Gas at the wholesale level jumped 5.7 percent in March. Much of the price increase is being passed along to consumers, who on Thursday paid an average of $3.81 for a gallon.

Diane Swonk, chief economist at Mesirow Financial, said the economy is seeing “a blip” in inflation because of the rise in gas prices, as well as higher foods costs. But “it is just very hard for the broader economy to hold price increases for very long when that blip is causing consumers to curtail spending elsewhere,” she said.

Overall, the Producer Price Index, which measures price changes before they reach the consumer, rose 0.7 percent last month and is up 5.8 percent over the past year, the Labor Department said Thursday. Food prices eased slightly in March after having risen in the previous month by the most in 36 years.

Excluding volatile food and energy, inflation at the wholesale level was relatively tame.

There were some signs that could change. New cars rose by the most in nearly two years and the cost of some types of furniture jumped. Still, core prices have risen by less than 2.0 percent over the past year, well within the Federal Reserve’s preferred range for inflation.

A majority of Fed policymakers, including chairman Ben Bernanke, say the surge in oil and gas prices will lead to only a temporary increase in inflation. For inflation to take off, workers typically have to receive higher wages, which hasn’t happened. Average hourly pay has only risen 1.7 percent in the past year, a fact that has kept inflation from spreading.

“Unfortunately, wage growth has not been commensurate with the pickup in job creation,” said Dan Greenhaus, chief economic strategist at Miller Tabak. “The economy can add a zillion jobs but if wage growth is not coincident purchasing power is likely to be constrained.”

 


Only subscribers are eligible to post comments. Please subscribe or to participate in the conversation. Here’s why.

Use the form below to reset your password. When you've submitted your account email, we will send an email with a reset code.