Wholesale Prices

Wholesale prices declined 0.2% in July, the Labor Department said Friday, indicating to analysts that inflation remains under control and that the Federal Reserve has room to lower interest rates further to encourage economic recovery. The drop was welcomed by both the White House and private sector economists, who had predicted that producer prices would remain unchanged in July. The decline follows a 0.3% decrease in June and a 0.6% increase in May, the Labor Department said.

Surging food prices helped push U.S. wholesale prices sharply higher last month, according to government data Thursday that analysts said indicated bubbling price pressures but no clear-cut inflation threat. A separate report showed a dip in first-time claims for jobless benefits last week, but economists said the drop was too slight to signal quick gains in the labor market.

Wholesale prices fell for the third consecutive month in August, the government reported Friday, but economists noted that plummeting energy prices masked a continuation of moderate inflation for most wholesale goods. The Labor Department said its producer price index dipped 0.4% last month, following an identical drop in July and a 0.1% decline in June. The index of wholesale prices is considered a good indication of where consumer prices are headed.

Higher energy prices, offset partly by lower food costs, boosted wholesale prices by 0.2% in August, the Labor Department said Thursday. Although the figure was the first increase in three months, it was smaller than expected and modest enough to indicate that inflation remains in check. This year's wholesale price increases have been the lowest since 1986.

Wholesale prices rose a modest 0.2% last month as large jumps for gasoline and home heating oil were offset by slightly lower food prices, the government said today. The July increase followed an identical 0.2% jump in June and a 0.3% rise in May, bolstering Reagan Administration predictions that inflation will slow in the second half of 1987.

While the world is awash in crude oil, Californians are facing tight supplies of gasoline that have already sparked a sharp run-up in some wholesale prices and are likely to result in higher prices at the pump. The sudden reversal of a three-month decline in state gasoline prices is described by oil company officials as a temporary problem caused by shutdowns and malfunctions at several refineries in the Los Angeles area.

First-time claims for unemployment benefits rose more than expected and prices paid to U.S. producers tumbled, signaling no end to the job-market rout and collapse in raw-materials prices spurred by the deepening recession. Initial jobless claims increased to 524,000 in the week ended Jan. 10, the Labor Department said Thursday. That was up from 470,000 the previous week, which was revised from the 467,000 initially estimated.

Wholesale prices edged up 0.2% in June, the Labor Department said Friday in a report cited by economists as further proof that inflation for most goods is slowing sharply. The producer price index has increased only 3.1% over the last year and has advanced at a 3.7% annual rate during the first half of 1990. But the index of wholesale price changes has remained unchanged since January, when bad weather sent food and energy prices soaring.