U.S.

PPI Signals Slowdown For Economy

June 9, 2000 / 10:22 AM EDT / AP

Wholesale prices held steady in May as falling energy and food prices more than offset increased prices for cars, paper products and books.

The flat reading in Friday 's Producer Price Index, which measures inflation pressures before they reach the consumer, followed a 0.3 percent decline in wholesale prices in April pulled down by a sharp drop in the costs of energy, the Labor Department reported.

May's performance surprised analysts, who were predicting a 0.3 percent increase in wholesale prices.

Outside the volatile energy and food categories, the "core" rate of inflation at the wholesale level rose 0.2 percent, slightly higher than the 0.1 percent gain many analysts were forecasting. In April, core prices grew by a tiny 0.1 percent.

The Federal Reserve has raised interest rates six times since last June, including an aggressive half-point increase in May, to slow the economy and keep inflation from becoming a problem.

Some recent economic reports, including home sales, factory orders and unemployment, have offered signs that the economy may be slowing a bit. Against this backdrop, economists have offered mixed opinions on whether Fed policy-makers will nudge up rates for a seventh time when they meet June 27 and 28.

So far this year, wholesale prices have been rising at an annual rate of 4.3 percent, compared with a 3 percent gain for all of 1999. The pickup in this year's wholesale prices largely reflects rising energy costs.