As Costs Fall for Energy, Prices Drop for Producers

The Bureau of Labor Statistics report showed that its index of wholesale prices fell 0.4 percent in June, after a rise of 0.2 percent in May. The decline last month was the steepest since February of last year and exceeded analysts’ forecasts of a 0.2 percent drop.

The 2.8 percent decrease in energy prices was the largest drop in that category since a 4.7 percent decrease in July 2009. Prices for gasoline, which had been rising in the first part of the year partly because of turmoil in Arab oil-producing countries, moved down 4.7 percent, the department said. The decline in energy prices more than offset the rise in food, which was up 0.6 percent in June.

When the volatile food and energy prices are extracted from the overall index, the core Producer Price Index rose 0.3 percent in June after a 0.2 percent increase in May, making it the seventh consecutive monthly rise.

The core index has risen 2.4 percent in the last year, the government report said.

That the core price index rose was “somewhat of a relief,” especially to the Federal Reserve, said Cliff Waldman, an economist for the Manufacturers Alliance. “It is a sign we have gotten out of the deflationary danger zone.”

The Federal Reserve chairman, Ben S. Bernanke, said on Wednesday that a renewed threat of deflation was one condition that could cause the central bank to resume its economic aid campaign, called quantitative easing.

The data on producer prices was one in a series of reports on Thursday that showed the state of the economy.

In the week ended July 9, the number of initial claims for unemployment benefits was 405,000, a decrease of 22,000 from the revised figure of 427,000 in the previous week, according to the Department of Labor.

Economists said that over all the decline in the weekly number was a positive sign, at least for one week.

But a better gauge, they said, is the four-week average, which also fell but remained above 400,000, a benchmark for job growth.

“The rule of thumb is that whenever you have the four-week moving average that goes under that number, that usually is a sign associated with payroll growth,” said Gregory Daco, the principal United States economist for IHS Global Insight.

So despite the most recent week’s decline, the current numbers are “still indicating some weakness in the unemployment market,” he said.

The Department of Commerce reported that retail sales in the United States rose 0.1 percent in June, after a decline of 0.1 percent in May. The increase was partly a result of a rise in auto prices.

“On the auto retail sales side of things, it seems that the supply chain disruptions emanating from the mid-March earthquake in Japan are probably easing,” said Chris G. Christopher Jr., the senior principal economist for IHS Global Insight, in a research note.

Over all, he said, the economy still has a number of pressure points. Unemployment rose to 9.2 percent in June, according to the latest government report. The stock market is volatile, consumer confidence is depressed and home prices are still scraping the bottom.

“Consumers are fatigued,” he wrote. “The only real good news on the consumer side of the economy is that gasoline prices started to fall, but are still relatively high.”

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