A continued rise in oil prices pushed the producer price index up 0.2 percent last month while the cost of other items, on average, were little changed, the Labor Department reported yesterday.
The "core" portion of the PPI, which excludes volatile food and energy prices, was unchanged in November after rising significantly in September and October because of price increases for new cars and light trucks. In a partial reversal of those increases, prices of light trucks, a category that includes popular sport-utility vehicles, fell 1.1 percent last month, the department said.
The report had little impact on the stock market, but the unchanged level of the core PPI apparently reassured some investors in bonds that the increases of the prior months weren't continuing. Prices of 30-year U.S. Treasury bonds rose $6.87 1/2 per $1,000 face value and their yield, which goes down when prices go up, fell to 6.16 percent from 6.21 percent at Thursday's market close.
"The November core PPI data continue to show that we have not yet seen a generalized pickup in inflation," said Dana Saporta of Stone & McCarthy Research Associates, a financial markets research firm.
Gerald D. Cohen, an economist at Merrill Lynch & Co., had the same assessment of the PPI for finished goods, which tracks changes in the prices manufacturers charge when they first sell a completed item. In some cases, producer prices for finished goods are the same as wholesale prices but in many cases they are not.
"Inflation remains absent," Cohen said. "The PPI rose 0.2 percent as energy prices jumped 1.4 percent." Gasoline prices were up only 0.1 percent, but home heating oil prices shot up 7.5 percent and the cost of residential electric power, which has little link to oil, rose 0.7 percent.
Cohen noted that even with no change last month, the core PPI was up 1.8 percent since November 1998. But he added, "Almost all of that increase is the result of the 38.7 percent jump in tobacco prices. The core PPI excluding tobacco is up just 0.1 percent year-on-year."
Since the tobacco price increases have been the result of that industry's need to pay the cost of settling many damage suits against it, most analysts largely disregard the price increases in analyzing U.S. inflation.
Nevertheless, a number of forecasters expect that inflation will rise somewhat in coming months, even excluding oil and tobacco. For one thing, the cost of imported goods and services other than oil have begun to increase after falling for more than two years.
In a separate report released Thursday, the department said its index for import prices increased 0.5 percent last month for the second month in a row. Excluding petroleum, the index was still up 0.3 percent. Analysts said much of the latter increase was due to the decline in the value of the dollar against the Japanese yen, which has raised the price of Japanese goods in this country.
More generally, some forecasters also believe that the nation's unusually low unemployment rate and tight labor markets will begin to put upward pressure on wages during 2000 and cause more firms to increase their prices. However, others expect that continued strong competition will limit any such acceleration of inflation and encourage employers to resist increasing wages.