Led by the familiar villians food and fuel, wholesale prices soared 1.1 per cent in April for the second month in a row, the Bureau of Labor Statistics reported yesterday.
For the last three months, the wholesale price index has been rising at an annual rate of 13.1 per cent, the bureau said. A year ago, wholesale prices were increasing at a 3.8 per cent pace.
Farm prices increased 3.4 per cent last month after allowance for normal seasonal price differentials. It was the fifth straight month farm prices have gone up more than 1 per cent. Wholesale prices in the entire farm-food sector of the economy have risen at an annual rate of 20.5 per cent in the last six months.
Prices in the remaining or industrial sector of the economy went up 0.6 per cent last month after seasonal adjustment. These industrial prices have risen at an 8.5 per cent annual rate in the last three months, and are now 7.3 per cent higher than a year ago.
The main question surrounding yesterday's new figures was unanswerable: whether this spring's high inflation will abate now, or will continue. Experts were divided, and Office of Management and Budget Director Bert Lance, speaking or the Carter administration, said it was too early to tell. But "it is always serious when you see that kind of increase," he acknowledged to reporters.
Businessmen and Carter have been jittery about a revival of inflation in recent months and Carter said one of the reasons he withdrew his proposed $50-per-person tax rebate was to reduce inflationary pressures in the economy.
Wholesale prices are those businessmen charge each other, not the final prices consumers pay for products. But wholesale prices are a precursor of consumer prices, especially in the food area where a price rise on the farm can show up within a few weeks on supermarket shelves.
In February and March food cost increases with mainly due to effects of the severe winter weather that damaged crops and interfered with transportation, whereas now the impact of last winter on food prices is behind us, Courtenay Slater, chief economist for the Department of Commerce, says.
The "hidden villian" in the April farm food price surge is the soybean, according to Julius Shiskin, commissioner of labor statistics. Soybean prices have been rising steadily in recent months, in large part because of heavy foreign demand.
Shiskin noted that there is a "double-track" of inflation, with food and energy prices accelerating sharply, but with non-energy industrial prices rising at the same steady pace for the last year-and-a-half,d about 7 per cent.
Administration economists say that the underlying rate of consumer inflation is about 5 to 6 per cent a year and so far have found no reason to change that forecast.
Economists generally consider changes in industrial prices - such as chemicals, metals, plastics and energy - more important than changes in food prices because food prices are volatile and can rise and fal in rapid succession. Industrial prices change less frequently.
Besides soybeans, the Labor Department singled out milk, wheat and livestock as farm commodities whose costs rose in April. Poultry and egg prices also increased.
"On the other hand," the department said, "prices turned down sharply in April for cocoa beans and fresh and dried fruits and vegetables." Fruit and vegetable prices were the highest victims of the winter freeze.
There was a big 1.4 per cent rise in fuel prices, but most other industrial commodities behaved more moderately. Lumbeer prices fell 1.5 per cent.
The wholesale price index stood at 194.3 per cent of its 1967 average in April, which means that a group of goods that cost a businessman $100 in 1967 cost $194.30 last month. While all percentage changes are adjusted by the Labor Department to account for seasonal variation, the index itself is not.