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New Reports Fan Inflation Fears

Wholesale prices surged one percent in February - the largest gain in nearly 10 years - as gasoline and other energy costs took a huge leap, government said Thursday.

The big advance in the Labor Department's Producer Price Index, which measures inflation pressures before they reach the consumer, was a worse showing on inflation than many analysts were expecting. They were forecasting wholesales prices would rise by 0.6 percent.

In another report, the number of Americans filing new claims for unemployment benefits last week fell by an unexpected 19,000 to 262,000, the lowest level since Dec. 1, 1973.

Economists consider claims below 300,000 an indication of a tight labor market, meaning employers are having trouble finding qualified workers. Economists worry that employers will attract workers by giving them big boosts in wages and benefits - increased costs that companies could pass along to consumers in the form of sharply higher product prices, thus sparking inflation.

Last's month's reading on wholesale inflation was the worst showing since a one percent gain in October 1990. The jolt came from a whopping 5.2 percent spike in energy costs, the biggest jump since a 7.5 percent increase in October 1990.

By Jeannine Aversa
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