WASHINGTON — Wholesale prices increased a moderate 0.3% in September, as a steep jump in new-car prices partly offset the biggest monthly decline in energy prices this year, the Labor Department said Friday.
The report was largely in line with predictions and--together with the first monthly decline in prices for raw materials since last December--might, under other conditions, have offered some encouragement to financial markets spooked this week by soaring interest rates and inflation fears. But in the selling frenzy engulfing Wall Street, investors still drove down the Dow Jones industrial index Friday a record 108.36 points.
Also, analysts said they had feared that if wholesale price inflation had exceeded expectations, pressure on the Federal Reserve to push interest rates higher might have been irresistible.
"We're seeing stable inflation," said David Wyss of Data Resources, a Lexington, Mass., economic forecasting firm. "But the markets are in a bearish mood so they ignore good news and this isn't good enough to change many minds."
Kathleen Cooper, chief economist at Security Pacific National Bank in Los Angeles, said: "These numbers are good and should be settling from the point of view of inflation worries. All the measures, not just finished goods but also intermediate and crude goods, looked a lot better than we've seen in a long time."
Wholesale prices of finished goods were up 0.3%, intermediate goods were up 0.1% and crude goods were down a strong 0.9%.
Cooper said she expects modestly higher inflation at both the wholesale and consumer price levels of about 5% to 6% next year.
Donald Straszheim of the Merrill Lynch brokerage firm in New York noted that long-term interest rates, which climbed above the 10% level this week, are heavily linked to inflation fears. "Over the past month, inflation fears have become very high but we don't see the evidence to support that," he said.
Dissenting from the more prevalent upbeat view was Irwin L. Kellner, chief economist at Manufacturers Hanover Trust in New York. Kellner discounted the September price trends for intermediate and crude goods, citing instead a trend beginning late last year that shows "all those prices rising at progressively faster annual rates."
"I would say we have inflation already, with more to come," he said.
Fuel Prices Drop
In Friday's report, wholesale prices for fuel products fell 3.7%, after 1.5% increases in July and August and a 10.6% increase over the last 12 months. But new-car prices jumped 3.6% in the month, marking the end of manufacturers' price rebates to dealers and other concessions that had driven car wholesale prices down 1.8% in August.