Commodity prices rise on concerns about inflation

Most commodity prices rose Thursday after a new government report indicated inflation may be inching higher.

The Labor Department said the Consumer Price Index rose 0.4 percent last month. Core prices, which exclude volatile food and energy costs, rose 0.2 percent. That's the largest monthly increase in more than a year.

Food prices increased 0.5 percent in January, the most in more than two years. Energy costs rose 2.1 percent.

The dollar weakened after the report came out as investors worried that inflation could creep up. That in turn helped send commodity prices higher. Commodities contracts are often used by investors as a hedge against inflation and a weak dollar.

"It's basically the only place people want to put money," said Spencer Patton, founder and chief investment officer for hedge fund Steel Vine Investments LLC. "It's pouring both into stocks and commodities, just anything that is going to protect you from a weakening dollar and get you protection from inflation."

Stocks are on a strong run this year. The S&P 500 is up 6.6 percent since the beginning of the year.

Silver and gold also benefited as investors worried about anti-government protests continued in the Middle East. The precious metals often are seen as safer assets to hold during uncertain times.

Silver for March delivery added 94.1 cents, or 3.1 percent, to settle at $31.57 an ounce while April gold settled up $10 to $1,385.10 an ounce.

In other metals contracts for March, copper rose 1.4 cents to settle at $4.484 a pound and palladium gained $4.65 to $843 an ounce. April platinum added $9.70 to settle at $1,844 an ounce.

Cotton prices jumped on expectations of stronger global demand as supplies remained tight. Cotton for March delivery added 7 cents, or 3.6 percent, to settle at $2.0402 a pound.

In other agricultural contracts for March, wheat rose 13.75 cents to settle at $8.5075 a bushel, corn added 22.25 cents, or 3.2 percent, to $7.1275 a bushel and soybeans gained 38.5 cents to $14.045 a bushel.

Energy contracts mostly were lower. Benchmark oil for March delivery rose $1.37 to settle at $86.36 per barrel on the New York Mercantile Exchange. Traders were concerned that oil supplies may be disrupted by the unrest in the Middle East.

In other Nymex trading, heating oil fell 4.24 cents to settle at $2.7324 a gallon and gasoline fell 1.7 cents to $2.5277 a gallon. Natural gas lost 5.3 cents to settle at $3.868 per 1,000 cubic feet.

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Christopher S. Rugaber contributed to this report.