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Wages fall as costs climb 0.6 in March

Fed survey cites inflation pressures

WASHINGTON -- Americans got hit with an economic double whammy last month. They had to pay more for gasoline, clothes, airline tickets and a lot of other products. And their wages did not keep up with inflation.

It was the second month in a row that wages, after adjusting for inflation, had fallen.

The Labor Department reported that its closely watched consumer price index showed prices rising by 0.6 percent in March, the biggest advance since last October, as the cost of gasoline and other energy products shot up.

And even more worrisome, prices outside of the volatile energy and food categories, rose by 0.4 percent, double what analysts had expected, and the highest increase for so-called core inflation in 2.5 years.

While inflation was rising, the Labor Department said in a separate report the average weekly earnings of nonsupervisory workers, after adjusting for inflation, fell by 0.3 percent in March after having dropped by the same amount in February. Real weekly earnings had risen by 0.2 percent in both January and December.

Underscoring that inflation pressures are rising, the Federal Reserve said yesterday in its latest survey of business conditions in the Fed's 12 regions that ''price pressures have intensified in a number of districts and most report that high or rising energy prices are a concern."

The Labor Department reported gasoline prices climbed 7.9 percent last month, the biggest rise since an 8 percent surge in October.

Excluding food and energy, core inflation is rising at an annual rate of 3.3 percent in the first three months of this year, significantly higher than the 2.5 percent increase in 2004.

The Fed's latest survey of regional conditions said economic growth was continuing from late February through early April but that the growth ranged from ''robust" to ''moderate" to ''uneven."

In the Boston area, the Fed's so-called beige book reported the region's economy expanded and ''most retailers say first-quarter sales were up from a year ago." Orders and revenue at manufacturers were ''generally ahead of year-earlier levels." Capital spending cooled. Residential real estate markets ''are leveling off" in some areas.

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