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To: Dwight E. Karlsen who wrote (41074)	2/19/1999 8:46:00 AM
From: Glenn D. Rudolph	Respond to of 164684

February 19, 1999 ------------------------------------------------------------------------ U.S. Producer Prices Climbed 0.5% In January; Inflation Surge Isn't Seen By ALEJANDRO BODIPO-MEMBA Staff Reporter of THE WALL STREET JOURNAL WASHINGTON -- Sharp increases in wholesale food and energy prices pushed producer prices up 0.5% in January, the biggest one-month jump in more than two years. But analysts said the Labor Department report doesn't appear to presage a resurgence of long-dormant inflation. Excluding the volatile food and energy sectors, the producer-price index actually fell, by 0.1%, in January. Energy prices already have started to drop. (All figures are seasonally adjusted.) "Overall, it's not a disturbing picture on the inflation front, and I wouldn't take this to be alarming at all," said Kathryn Kobe, a senior economist with Joel Popkin & Co., a Washington-based economic consulting firm. The weather was largely to blame for the 1.6% rise in food prices, which were flat in December, and a 1.8% jump in energy prices, which declined 2.3% the previous month. Freezing temperatures and ice storms in early January decimated citrus crops and helped drive gasoline prices up 6.5%, following an 8.5% drop in December. Oil prices jumped to $14 a barrel in early January, from $10 to $12 in December. In addition, long-depressed pork prices surged 18.3% following a 4.5% decline in December; even with the price increase, hog farmers remain mired in a recession. But all the increases were an aberration. January was milder than expected in the Northeast and Midwest; by late in the month, oil prices dropped back to $11 to $12 a barrel. See the full text of the Labor Department report on producer prices. See the full text of the weekly Labor Department report on initial jobless claims "Energy prices may be reaching a bottom," said Tim Martin, an economist with Bank of America. There are signs a nearly two-year downturn may be reversing: Asian demand is picking up, and oil states are looking to further curtail production. "Most of the good news about energy prices is likely behind us," he said. The jump in the January producer-price index followed another outsized increase, of 0.4%, in December. That figure was inflated by a one-time surge in cigarette prices following the legal settlement between tobacco companies and state governments. In January, tobacco prices fell 0.2%. Prices for consumer items such as passenger cars, sporting goods and footwear all fell for the month. Capital equipment prices also slipped 0.1%; they were flat in December. Separately, the U.S. labor market remains tight as the number of initial claims for unemployment insurance rose by 4,000 last week to 288,000, following an upwardly revised 284,000 the previous week. The four-week moving average, considered a better gauge because it accounts for weekly fluctuations, fell to 292,000 from 298,750.