A spike in the cost of gasoline pushed wholesale prices higher in March, a trend that could limit consumer spending in the coming months. Still, most economists don’t expect that will lead to widespread inflation because businesses are wary of raising prices when most people aren’t getting significant pay increases. Gas at the wholesale level jumped 5.7% in March. Much of the price increase is being passed along to consumers, who today are paying an average of $3.81 a gallon, nationally.
Diane Swonk, chief economist at Mesirow Financial, says the economy is seeing “a blip” in inflation because of the rise in gas prices as well as higher foods costs. But “it is just very hard for the broader economy to hold price increases for very long when that blip is causing consumers to curtail spending elsewhere,” she says. Overall, the Producer Price Index, which measures price changes before they reach the consumer, rose 0.7% last month and is up 5.8% over the past year, the Labor Department says. Food prices eased slightly in March, after having risen in the previous month by the most in 36 years. Excluding volatile food and energy, inflation at the wholesale level was relatively tame.