Wholesale Prices Fall 0.6% for Negative Inflation Rate
Wholesale prices fell 0.6% in September, helped by year-end clearance sales on 1985 autos and a continuing decline in food prices, to push the annual wholesale inflation rate into negative figures for the first time since January, the Labor Department said today.
In a separate report, the Commerce Department said retail sales for September increased sharply, 2.7% over August, registering the biggest gain since April, again owing to auto sales. Total sales for September totaled $120.2 billion.
The drop in the producer price index, the third decline in wholesale costs the last four months, means that a corresponding inflation rate for the nine months of 1985 was a negative 0.1%. That means wholesale prices for the year actually are falling.
Lower Car Prices Cited
Labor Department economist Craig Howells said sharply lower prices for cars and trucks--as auto makers tried to liquidate inventories of 1985 models--and food prices accounted for at least two-thirds of the drop in the index.
The index for consumer goods other than food and energy fell 0.5%, after showing no change a month earlier.
Most of the September price drop was due to a 3.8% decrease for passenger cars and a 2% decline for light motor trucks. In addition to the traditional end-of-model year liquidation allowances, low-interest financing terms offered by manufacturers resulted in a considerable reduction in producer prices.
Food prices moved down 0.9% in September, with reductions for pork, fresh fruits and vegetables accounting for most of the decline.
Prices for processed fruits and vegetables, beef and veal, shortening and cooking oils, dairy products and fish also declined. But prices for eggs, poultry and coffee rose.
The last time wholesale prices went down as much in any single month was January, 1983, when the rate was negative 0.7%.
Last Negative Rate in 1963
If the last three months of the year also keep the rate on the minus side, 1985 would be the first year since 1963 that the rate was on the negative side.
The drop in September’s wholesale price index follows a 0.3% decline for August.
Energy prices edged down 0.1% in September after falling significantly in each of the previous three months.
