Prices at the wholesale level jumped a surprising 0.8 percent in November, following an even sharper jump a month earlier, as food costs continued to surge.
Economists said that the sharp rises in the producer price index did not indicate inflation is accelerating, however. Prices at the producer level generally are passed on eventually to consumers at the retail level.
The November and October increases in the producer price index followed three declines in the previous four months, and inflation at the wholesale level still was only 1.5 percent for the past 12 months. Prices at the retail level were up 3.2 percent from a year ago.
The government also reported yesterday a 0.4 percent rise in production at the nation's factories, mines and utilities last month, following a 0.4 percent decline in October.
Recent economic statistics, including those released yesterday, suggested to economists that consumers will continue to spend moderately in the next year and that the the economy will maintain growth in the 2.5 to 3 percent range, with neither boom nor bust. Inflation is expected to increase only modestly.
"Despite the recent upturns in the producer price index, we believe inflationary pressures are largely held in check," White House spokesman Larry Speakes said.
"In the meantime, the economy continues to grow at a steady, moderate pace" and the agreement to reduce the federal budget deficit should bring "welcome reassurance that the current economic recovery should continue into the foreseeable future," Speakes said.
Private economists said they expected energy prices to decline next year in light of disarray within the Organization of Petroleum Exporting Countries. In addition, they said they didn't expect food prices to continue to rise.
"I don't think you're going to see those price increases sustained," said Joseph G. Carson, senior economist for Merrill Lynch Economics. Oil prices rose largely because the winter season began with low inventories and some price increases built into contracts, Carson said.
"The jump in the producer price index in November is a one-time only development with no real implications for the future level of inflation," said Gordon Richards, directer of economic analysis for the National Association of Manufacturers.
"Most of the increase is attributable to short-run increases in the relative price of food and energy which are largely seasonal in origin," Richards said. "Nevertheless, in view of the disarray of OPEC and the resulting decline in oil prices, energy costs should fall continuously next year. For 1986, the inflation rate should be in the area of 3 percent."
The producer price index for consumer foods rose 1.6 percent in November, following a 1.4 percent rise in October, the Labor Department said. The index for finished energy goods increased 3.1 percent, the first rise since May as prices rose sharply for gasoline and home heating oil, Labor said. The index for natural gas declined.
In the last year the index for consumer foods showed no change, while prices for finished energy goods dropped 2 percent at the wholesale level. Prices of consumer goods other than foods and energy rose 2.8 percent in the last 12 months while the index for capital goods dropped 0.7 percent, Labor said.
Prices for goods at the intermediate level of processing increased 0.3 percent, the second consecutive monthly increase. Prices at the crude level -- goods with little or no processing -- increased 2.9 percent last month following a 3.1 percent rise.
Many economists have said they expected the decline in the value of the dollar to begin affecting prices, since a lower dollar means import prices rise. Higher import costs also relieves price pressures on domestic manufacturers who may begin raising their own prices. Economists said that dollar-related price increases generally show up in crude goods first.
Crude good prices had declined every month since December 1984 until this past October.
In a separate report, the Federal Reserve Board said that production at the nation's factories last month rose 0.5 percent following a 0.3 percent decline in October. Production of business equipment increased 0.5 percent following a 0.7 percent drop in October, and output of consumer goods rose 0.4 percent following a 0.5 percent decline the previous month.
In a third report, the Commerce Department said business inventories rose 0.5 percent in October, the largest increase in 12 months, as business sales fell 0.6 percent. The largest increase was at the retail level, where inventories increased 2.5 percent.