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Higher energy and food costs lift wholesale prices

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By Associated Press

WASHINGTON (AP) — A spike in oil and food costs pushed wholesale prices up last month by the biggest amount in nearly a year, a trend that could threaten the still-fragile global economy.

The Producer Price Index, which measures price changes before they reach consumers, rose 1.1 percent in December, the Labor Department said Thursday. That was up from a 0.8 percent rise in November and was the largest increase since January 2010.

Outside the volatile energy and food categories, so-called core prices rose just 0.2 percent, down from a 0.3 percent rise in November. That lower reading indicates overall inflation remains tame. For all of 2010, core prices rose just 1.3 percent last year. That was up from a 0.9 percent increase in 2009 but still historically low.

Still, the rise in commodity prices is putting pressure on retailers. Most have so far resisted passing along price increases to consumers in the weak economy.

"The December producer price report cannot be dismissed simply because roughly three-quarters of the gain was in food and energy," said Joel Naroff, president and chief economist at Naroff Economic Advisors. "That is because food and energy cost increases are rapidly passed through to the consumer and these are not products which you can do without very easily."


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