Wholesale Prices Shoot Up At Fastest Pace Since 1981

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 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 yesterday that wholesale prices shot up 1.2% 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% gain that economists expected and left prices rising over the past 12 months by 9.8%. 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% last month. That increase was the biggest since November 2006 and more than triple the 0.2% rise in core prices that had been expected.

Elsewhere, the Commerce Department reported that construction of new homes and apartments slid to an annual rate of 965,000 units in July, a 17-year low. Builders continued to slash production as they battled slumping sales and soaring mortgage defaults dumping more homes on an already glutted market.