Trade Deficit Rises Slightly; Wholesale Food Prices Jump

America’s trade deficit expanded only slightly in May and inflation remained moderate in June, the government said today, although analysts saw cause for inflation worry in a steep, drought-induced climb in wholesale food prices. The trade report sent the dollar soaring.

The Commerce Department said the trade deficit rose to $10.9 billion in May from a revised $10.3 billion in April, but the number was still the second smallest in almost three years and well within economists’ expectations.

Imports rose 3.4% to about $37.6 billion, but the increase was largely offset by a 2.3% increase in exports, which rose to about $26.6 billion, very close to the record level for exports set in March.

The Labor Department said wholesale prices one step short of retail rose a moderate 0.4% in June. But the drought searing much of the nation sent prices for raw food soaring at their steepest pace in more than 2 1/2 years.

The department said raw food costs jumped 4.2% last month, a rate not seen since the 5.1% climb of October, 1985. Further along in the wholesale process, however, prices for foods ready to be retailed rose 1.1%, reflecting earlier, though less severe, increases in raw food costs.

Examples of Increases

Some examples of price increases at the unprocessed-food level:

--Wheat, 25.3%.

--Corn, 24.3%.

--Turkeys, 22.8%.

--Soybeans, 22%.

--Chickens, 22.5%.

Reflecting the fact that many farmers are slaughtering animals they cannot afford or find feed for, cattle prices fell 5.2% while hog prices were down 4%.

In other reports released today, the Federal Reserve said June industrial production rose 0.4%, largely because of higher electricity output, and the Commerce Department said May business inventories rose 0.6%, which suggested a slight slowdown in sales.

But those reports weren’t watched as closely as the news on trade and inflation, which was better than many thought and sent money traders scrambling to buy dollars. The currency’s strong advance prompted some central banks to sell dollars in the market to stem the rise, traders reported.

Dollar Up Nearly 1 Cent

Financial markets, which have been thrown into a tailspin by bad trade figures over the last year, reacted favorably to the good news. The dollar rose almost 1 cent against the British pound and nearly 1 Japanese yen in London trading immediately after the trade figures were reported.

Analysts said the May trade figure was welcome news, proving that sharp drops in the deficit in March and April were not flukes.

The figures were also good news for the Reagan Administration, which is counting on strong export growth to propel the economy in this presidential election year.

For the first five months of the year, the U.S. trade deficit has been running at an annual rate of $140.7 billion, down substantially from the record deficit of $170.3 billion run up last year.

The improvement has come from a boom in export sales, which for the first five months of this year are running a remarkable 30.4% above the same period in 1987.