WASHINGTON — Wholesale inflation soared in July, leaving prices rising at the fastest pace in nearly three decades. While recent declines in oil and other commodity prices raise hopes that inflation may have peaked, some economists worry about the widespread nature of the July price surge and caution it will take more time for that pressure to ease on Wall Street and Main Street.
The Labor Department reported Tuesday that wholesale prices shot up 1.2 percent in July, pushed higher by rising costs for energy and a variety of other products from motor vehicles to plastic goods.
The increase was more than twice the 0.5 percent gain that economists expected and left prices rising over the past 12 months by 9.8 percent. That marked the biggest annual increase since the 12 months ending in June 1981, a period when the Federal Reserve was driving interest rates to the highest levels since the Civil War in an effort to combat a decade-long bout of inflation.
Core prices, which exclude food and energy, rose 0.7 percent last month. That increase was the biggest since November 2006 and more than triple the 0.2 percent rise in core prices that had been expected.
Wall Street tumbled on the gloomy economic news as investors worried that the worst housing slump in decades was showing no signs of a rebound and that the Federal Reserve’s tool to combat the weakness — lowering interest rates — was unlikely to be used, given the sharp jump in inflation last month in wholesale and consumer prices.
Last week, the government reported that consumer prices had jumped by 0.8 percent in July, leaving prices over the past 12 months rising at the fastest pace since 1991.
The July price pressures reflected in part the surge in energy costs that pushed crude- oil and gasoline prices to record highs.
Crude-oil prices have fallen by more than $30 per barrel since then, raising hopes that inflation pressures will soon ease.
