Producer Prices See Unprecedented Six-Month Decline

Economy

Inflation at the wholesale level fell for a sixth straight month in June - a record for the 50 years the government has kept track.

“For the foreseeable future, inflation is dead,” said Paul Huard, of the National Association of Manufacturers.

The Labor Department reported Friday that the prices wholesalers pay for goods from melons to magazines edged a seasonally adjusted 0.1 percent lower last month, following monthly declines of between 0.2 percent and 0.6 percent since January.

The longest previous string of price declines since the government began tracking the Producer Price Index in 1947 was five in a row, from August through December 1952.

In spite of the fastest economic growth in a decade - which earlier this year made the Federal Reserve nervous enough about inflation to raise interest rates slightly - producer prices are declining at a 3.4 percent annual rate so far this year.

Retail prices have risen at just a 1.4 percent annual rate during the first five months of the year. The Labor Department’s June report, due out next week, should show continued stability, according to economist Song Won Sohn, of Norwest Corp.

“Good news abounds all over the place,” said Sohn. “We are clearly in uncharted waters and the only thing we can do is enjoy the combination of healthy economic growth and basically no inflation.”

Wall Street’s reaction to the news was favorable, with the Dow Jones Industrial Average closing up 35.06 at 7,921.82.