--US January producer prices +1.1%; core rate +0.7%
--Labor says cigarettes, autos cause "large part" of US PPI surge
--Labor says ex-cigarettes, autos, US PPI core +0.3% in January
--Labor says cigarettes, autos account for "large part" of PPI surge
--US January intermediate producer prices +0.7%; core +0.2%
--US January crude producer prices +13.9%; core +0.5%
--US Jan producer prices ex-energy +0.7%; energy prices +3.8%
--US Jan producer natural gas +11.3%; liquefied petroleum gas +15.3%
--US January producer gasoline prices +1.6%; heating oil -3.6%
--US January producer passenger car prices +1.2%;
--US January food producer prices +0.8%; cigarettes +6.3%
--US Jan producer capital equipment prices +0.3%, computers -5.4%

By Andrew Williams, BridgeNews
Washington--Feb. 16--Strong increases in energy, cigarette and passenger car prices forced the U.S. producer price index in January to rise an unexpected 1.1%, confounding predictions for a 0.2% gain. The core gauge, which excludes volatile energy and food prices, jumped 0.7%, also topping expectations for a 0.1% increase. Excluding energy prices only, the index was up 0.7%.
* * *
The January increase is a rapid acceleration from the unchanged level of December, which was contained by falling energy prices. The core PPI was up 0.3% in December as light truck, alcoholic beverage and prescription drug prices jumped higher.
January's energy goods index rose 3.8% as most components climbed. Gasoline prices climbed 1.6%, while natural gas surged a record 11.3%, and liquefied petroleum gas jumped 15.3%. Electricity costs rose 1.4%. However, home heating oil fell 3.6%.
The core rate was boosted by cigarette prices, which rose 6.3% in January, and passenger car prices, which rose 1.2%, the biggest increase since October 1999.
In contrast to most increases in producer prices, computers continued to decline, falling 5.4% in January.
WHAT WAS EXPECTED:
The PPI was above the estimates of private analysts, which ranged from unchanged to up 0.9%. The core PPI was also far above expectations, which ranged from down 0.1% to up 0.3%.
CRUDE AND INTERMEDIATE GOODS
Prices of intermediate and crude goods accelerated, with natural gas prices surging in both indexes.
Intermediate goods prices rose 0.7%, while the "core" intermediate goods index, widely watched for signs emerging price pressures, climbed 0.2%. In December, intermediate goods prices rose 0.4%, while "core" intermediate prices was unchanged. In this category, natural gas jumped 64.4%.
Crude prices surged 13.9%, while "core" crude prices rose 0.5%. In December, crude shot up 8.5% and core crude prices were up 0.3%. Crude natural gas prices surged 46.0%.
INFLATION IS NOT A FED CONCERN
The jump in prices was unexpected. Earlier this week, Federal Reserve policy-makers that, "inflation is not expected to be a pressing concern over the coming year." The statement was part of the Federal Open Market Committee's monetary policy report that accompanied Fed Chairman Alan Greenspan's testimony to the Senate Banking Committee Tuesday. The FOMC also said that lower energy prices should help restrain U.S. inflation this year. In addition, the slowing economy "should help damp increases in labor costs and prices," the FOMC said. End
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