WASHINGTON - A record jump in gasoline prices pushed wholesale inflation up at the fastest pace in more than three decades in November, while retail sales showed unexpected strength.
The Labor Department said yesterday that wholesale prices rose by 3.2 percent last month, the biggest increase in 34 years, reflecting a 34.8 percent surge in gasoline prices. And outside of energy and food, so-called core inflation posted a 0.4 percent jump, double what had been expected.
But in more upbeat economic news, the Commerce Department reported that retail sales increased by a better-than-expected 1.2 percent last month. It was the biggest sales advance in six months and reflected widespread strength in a number of areas from department stores to clothing shops and furniture stores.
Economists said the retail sales gain should ease concerns the economy is about to tumble into a recession, although they said overall growth in the current quarter is still likely to be weak given the headwinds battering consumers. Those troubles include the slump in housing, a severe credit crunch, and surging energy costs.
All of these problems have pushed consumer confidence down to the lowest point in two years, leading economists to forecast a subpar performance by holiday shoppers this year.
The big jump in wholesale prices was worrisome, economists said, because it was not limited to energy. That suggests that the relentless surge in energy prices could be spreading into more widespread inflation, something that would raise alarm bells at the Federal Reserve.
At the White House, press secretary Dana Perino said that one bad report on inflation "doesn't make a trend."
Half of the November increase in retail sales came from a big jump in gasoline pump prices and therefore was not seen as a sign of strength in consumer demand. But there were widespread gains across a number of other areas including department stores and stores selling clothing, appliances, furniture, and building supplies.
The government will release its look at consumer prices today.