Wholesale Prices Shoot Up 0.9 Pct.

Friday, October 13th 2000, 12:00 am

By: News On 6

WASHINGTON (AP) â€” Wholesale prices shot up 0.9 percent in September, the sharpest increase in seven months, led by big jumps in the cost of gasoline and heating oil. Car prices posted their biggest increase in five years and food costs rose for the first time in five months.

The seasonally adjusted advance in the Producer Price Index, which measures inflation pressures before they reach consumers, came after wholesale prices fell in August, the first decline in four months, the Labor Department reported Friday.

In another report, retail sales rose a stronger-than-expected 0.9 percent in September mostly reflecting strong car sales, which went up by 1.4 percent. Still, excluding automobiles, retail sales rose a brisk 0.7 percent.

In the first 90 minutes of trading on Wall Street, stocks were reclaiming some of Thursday's big losses. The Dow Jones industrial average was up 97 points and the Nasdaq index had gained 71 points.

September's report on wholesale prices was a worse showing on inflation than the 0.5 percent rise many analysts were anticipating.

The 0.9 percent increase marked the biggest one-month gain since a 1.1 percent spike in wholesale prices in February.

Much of September's jolt came from a 9.3 percent increase in gasoline prices, the largest increase since June, and a 13.4 percent increase in heating oil, the biggest rise since February.

Outside the volatile energy and food categories, the ``core'' rate of inflation at the wholesale level rose 0.3 percent in September, slightly faster than the 0.2 percent rise many analysts were expecting and largely reflecting the sizable gain in car prices. In August, the core rate rose a tiny 0.1 percent.

The Federal Reserve has boosted interest rates six times since June 1999 to slow the economy and keep inflation under control. Although Fed policy-makers left interest rates unchanged at their Oct. 3 meeting, they signaled that further rate increases were possible because of rising energy prices.

So far this year, wholesale prices have been rising at an annual rate of 4.1 percent, compared with a 3 percent gain for all of 1999. The pickup in this year's wholesale prices largely reflects rising energy costs.

In September, energy prices soared by 3.7 percent, the largest gain in three months, after falling by 0.2 percent in August.

Crude-oil prices have risen sharply this year as the Organization of Petroleum Exporting Countries limited production and U.S. supplies shrank. In September, prices hit a 10-year high of $37.80 a barrel.

Prices had moderated in recent weeks after President Clinton ordered the release of oil from the government's emergency reserves and some OPEC leaders said they were prepared to boost output.

But prices soared Thursday after an apparent terrorist attack on a U.S. military ship in Yemen sent prices as high as $37 a barrel, before falling back to $36.06.

For gasoline, the end of the summer driving season often means lower prices as demand dips and refineries convert more of their oil to heating fuel. But costlier crude oil kept gasoline prices high last month.

Because August's PPI report, based on information from earlier in the month, didn't catch big increases late in the month, economists were expecting September's report to show sharply higher energy costs.

Meanwhile, food prices rose 0.4 percent in September, the first increase since a 1.1 percent jump in April. Rising prices for fruits, vegetables and chickens swamped falling prices for dairy products, beef and pork. Chicken prices posted their biggest increase since February 1990.

Elsewhere in the report, car prices showed their largest gain since October 1995, rising 1.4 percent. Truck prices rose 1.5 percent, the largest increase since October 1989.