Wholesale prices rose 0.3 percent in February, led by a jump in energy costs, the Associated Press reported. This follows a 1 percent rise in January.

According to the Labor Department report, excluding food and energy, wholesale prices rose 0.5 percent, the biggest increase for core inflation since a 0.9 percent rise in November 2006. This is a sign that a steady increase in energy costs is beginning to spread to other parts of the economy.

The report also raises fear of stagflation, where the economy is stagnant at the same time that consumer prices are rising. Currently the Federal Reserve is focused on the threat of recession, and is predicted to lower interest rates again today.

Energy costs rose 0.8 percent last month, led by a 5.7 percent jump in residential natural gas prices and 2.9 percent increase in gasoline prices. Meanwhile, wholesale food costs fell 0.5 percent.

Wholesale prices for the past year have increased by 6.4 percent. Excluding food and energy, prices are up 2.6 percent for the past 12 months.