WASHINGTON Wholesale prices dropped sharply in July.
Over the past 12 months, they have fallen by the largest amount in more than six decades of record-keeping.
The U.S. Labor Department said yesterday that wholesale prices had dropped 0.9 percent last month, triple the decline economists had expected. The drop was driven by big decreases in both energy and food costs.
Over the past 12 months, the prices of goods before they reach store shelves have fallen 6.8 percent.
Core inflation, which excludes energy and food, also was well-behaved. It dropped 0.1 percent in July, better than the 0.1 percent increases economists expected.
Meanwhile, housing starts and applications for future projects both dipped unexpectedly last month, a sign that the building industry s recovery from the prolonged housing slump is likely to be bumpy and gradual. The Commerce Department said new construction fell 1 percent in July to a seasonally adjusted annual rate of 581,000 units. Economists expected a pace of 600,000 units.
Applications for building permits, an indicator of future activity, fell 1.8 percent to an annual rate of 560,000 units, below economists estimates of 580,000 units.
The declines in the Producer Price Index showed wholesale inflation pressures were more subdued than were prices for consumers. The government said last week that the Consumer Price Index was unchanged in July and over the past 12 months had fallen 2.1 percent, the biggest decline in nearly 60 years.
In July, wholesale energy prices fell 2.4 percent after climbing 6.6 percent in June.