Reply #18: Spin: Inflation falls at wholesale level

[UpInArms]

http://news.yahoo.com/s/ap/20070717/ap_on_bi_go_ec_fi/economy;_ylt=An2O5QxvKjKIOUkZ.HvMVrRv24cA

WASHINGTON - Wholesale inflation posted a better-than-expected reading in June as both food and energy costs retreated.

The Labor Department said its Producer Price Index fell by 0.2 percent last month, the first decline since a 0.6 percent dip in January. Since that time, wholesale prices had been recording big gains, reflecting the fact that gasoline surged to record levels and food costs have been rising because of heavy demand for corn to use in ethanol.

But in June, food prices dropped by 0.8 percent and energy prices were down 1.1 percent.

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Through the first six months of this year, prices at the wholesale level have been rising at an annual rate of 6.4 percent, a sharp acceleration from a flat reading for the final six months of last year.

However, most of the rising price pressures reflected the spurt in energy costs, which eased a bit in June.

Gasoline prices, which hit a record of $3.227 in late May fell steadily in June and early July before edging up again in recent weeks over renewed concerns about production problems. However, that rebound is expected to be temporary as refineries get back to full production.

Gasoline prices at the wholesale level fell by 3.9 percent in June, the biggest drop since a 13 percent plunge in January. Overall energy costs were down 1.1 percent last month as electric power and liquefied petroleum gas both fell while natural gas prices rose.

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