Wholesale Prices Off 0.1%; Industrial Output Drops

Wholesale prices fell 0.1% last month as a decline in meat and gasoline prices offset a leap in fresh fruit and vegetable costs, the Labor Department said today.

In a separate report, the Federal Reserve Board said production at the nation’s factories, mines and utilities dropped a sharp 0.5% in February, the biggest decline since September.

The Fed blamed weather problems for part of the slowdown, but the decline in activity was widespread among various industry groups.

With prices unchanged in January, overall wholesale prices dropped at an annual rate of 0.8% in the first two months of the year, the Labor Department report said.

That contrasts with an increase of 1.8% in wholesale prices for all of last year and a slight rise of 0.6% in 1983--the best back-to-back inflation performance in two decades.

At the White House, presidential spokesman Larry Speakes noted that wholesale prices have risen only 0.7% over the last 12 months, which he called “a remarkable achievement as far as holding down inflation.”

Many analysts had expected a price increase in February, figuring that severe winter weather had driven energy prices up and sent food costs soaring.

Prices for fresh fruit and vegetables did rise sharply, but less than had been expected, apparently because freeze damage in Florida was offset by higher yields in California. And the cost of gasoline and heating oil dropped because of slackening demand.

Prices soared 9.1% for fresh fruit and 4.6% for vegetables--both the result of January’s devastating freeze in Florida. But prices for beef, pork and poultry were down. Overall, food prices fell 0.1%.

Gasoline prices also were off, 3.4% below the level of the preceding month.

Energy prices also were docile despite the cold weather, helped along by a sharp 3.6% decline in heating oil prices.