A new round of food and fuel price increase sent wholesale prises soaring another 0.8 percent last month, the government reported yesterday. For all of 1978, wholesale prices role 9.1 percent, the most in four years.
The December jump, which works out to a compound annual rate of 10 percent, followed increases of 0.8 percent in Novermber and 0.9 percent in October. Wholesale food prices rose 0.9 percent in December, with particularly shoarp increased for beef, vegetables and dairy products.
The continuing inflation at the wholesale level bolstered warnings by Carter administration officials that the recent slowing of retail price rises would not last very long. Yesterday's figures pointed to heightened pressure on President Carter's new wageprice guidelines.
In a separte report, the Commerce Department said its latest survey showed American businesses have further reduced their plans for investment in new plants and equipment, dampening re maining hopes that this sector might spur the economy some this year.
The developments came as presidential budget director James T. McIntyre criticized plans by California Gov. Edmund G. (Jerry) brown Jr. to seek a constitutional amendment mandating a balanced federal budget. McIntyre warned that such a restriction would deprive the government of flexibility in a recession.
In a meeting with reporters, McIntyre said it would be "practically impossible" to draft a balanced-budget provision that would enable the government to operate realistically. He asserted the best way to reduce the present defict would be to follow Carter's recommendations.
Carter pledged during the 1976 presidential campaign he would balance the federal budget by 1980, but since has backed away from that promise. The president's fiscal 1980 budget, due out the week after next, is expected to call for a deficit of just under $30 billion.
The December increase in wholesale food prices was spread throughout virtually all major grocery intems. Prices of meats, poultry and fish rose 1.9 percent over the month; dairy prices jumped 1.6 percent; and prices of fresh fruits and vegetables rose 5.5 percent.
Moreover, the Agriculture Department reported that the nation's orange harvest most likely will shrink sharply as a result of the recent cold spell, pointin to even higher citrus fruit prices in coming months. The orange crop is down 5 percent even excluding the post-New Year freeze.
Among nonfood commodities, yesterday's price report showed sharp increases in a variety of basic items. Gasoline prices rose 4 percent, fuel-oil prices 1.9 percent, apparel prices 0.5 percent, and footwear prices 1.5 percent. Wholesale prices affect consumer prices with little lag.
Perhaps the major bright sopt in yesterday's report was a slowdown in prices of crude industrial materials -- indicating there may be some relief in wholesale prices of finished goods later this year. Crude prices rose 0.4 percent in December, down from 1.5 percent the previous month.
The Commerce Department's survery showed businesses now plan to increase their capital spending by only 3 percent, after inflation, over 1978 levels -- even less than the lackluster 4.5 percent rise posted last year. The administration had been hoping for a much larger jump.
The report was regarded as disappointing because analysts say the economy will need more thrust from business investment after consumer spending tapers off later this year. Capital investment also is considered a major element in boosting productivity.
However, Commerce Department ananlysts noted that despite the general slackening, spending plans still were relatively robust in key manufacturing industries, which said they hope to boost their investment by 6 percent, after adjustment for inflation.
Commerce Secretary Juanita Kreps conceded in a statement that the figure "still falls short" of what the administration had hoped for. However, she contended that the survey indicates at least some companies "are likely to raise their investment sights" if interest rates decline.
Yesterday's figures brought the overall wholesale price index to 202.4 percent of its 1967 average. That means it took $202.40 to buy the same goods at wholesale last month that cost $100 in 1967.
The 9.1 percent rise for all of 1978 was the largest annual jump since 1974, when the wholesale index climbed a staggering 18.3 percent, at the start of the 1974-75 recession. In 1977, wholesale prices rose by 6.6 percent.
For 1978 as a whole, food prices at wholesale rose 11.9 percent, according to the department, while nonfood prices climbed 8.3 percent. Wholesale caital equipment prices were up 8 percent over the period.