Producer Price Jump, Biggest in 6 Years (Reuters.com) By Tim Ahmann

WASHINGTON (Reuters) - U.S. producer prices, excluding food and energy, shot up at their fastest pace in six years in January as tobacco, auto and alcohol costs spiked, the government said on Friday in a report that fanned inflation fears.

A separate report showing U.S. consumer sentiment softened this month failed to ease financial market worries on inflation and profits, fueled by the broad-based price gains, which also raised expectations for Federal Reserve interest-rate hikes.

Overall, the producer price index, which measures prices received by farms, factories and refineries, rose just 0.3 percent last month as energy prices tumbled 1 percent and food costs slipped 0.2 percent, the Labor Department said.

But the core index, which strips out volatile food and energy prices, shot up 0.8 percent, the biggest gain since December 1998. Over the past year, core producer prices climbed 2.7 percent -- the largest 12-month gain in nine years.

Wall Street had expected core prices to rise just 0.2 percent and the surprisingly big jump weighed on markets.

(More ... Latest Business News and Financial Information | Reuters.com)  ¶ 12:07