Lower Energy, Food Prices Hold Inflation Rate at Zero

Moderating energy prices combined with another decline in food costs to keep the wholesale inflation rate for June at zero, the government said today.

That enabled the economy to finish the first six months of the year with an annual wholesale inflation rate of 1.4%.

The flat figure for June came after four consecutive months of slight increases in the overall index, fueled mostly by higher energy costs.

Meanwhile, retail sales fell a sharp 0.8% in June, the biggest decline in 11 months.

Retail Sales Down

The Commerce Department said retail sales totaled $113.9 billion in June, contrasted with $114.8 billion in May sales. All the figures are seasonally adjusted.

With consumer spending a driving force behind the current economic recovery, the disappointing June sales performance is likely to spur fears about the durability of that recovery.

At the White House, presidential spokesman Larry Speakes said the latest wholesale price figures “show the Reagan Administration is continuing to hold the line on inflation and doing well in that effort. The recovery remains the kind the President’s program has been aimed at all along: sustained growth with low inflation.”

The wholesale price report noted that food prices, which have been falling steadily since December, were down only 0.1% last month because of higher prices for beef and veal and fresh fruits and vegetables.

But the energy component fell 2% in June after a 3.4% increase in May and a 5.8% jump in April. Analysts had been saying that those big April and May fuel price increases would taper off as lower world crude oil prices filtered through the economy, but the 2% drop last month was larger than expected.

Some Rise Projected

Wholesale prices overall were up 0.2% in May and 0.3% in April, and most analysts had been projecting at least some increase in the June inflation rate.

The 1.4% inflation rate for the first half of the year contrasts with a 2.8% increase in the comparable period for 1984.

Some other details from the June wholesale price index:

--Gasoline prices inched up 0.4% in June after a 3.8% increase in May and a 9.5% jump in April.

--Automobile prices rose 0.4% for the second straight month.

--Prescription drug prices fell 1% last month after rising 2.3% in May.

All the prices were adjusted for normal seasonal variations.