Vegetables Pace 0.3% : Wholesale Price Drop

A second steep drop in vegetable costs helped push wholesale prices down 0.3% overall in April, the government said today.

It was the sharpest decline since August and the third consecutive moderate report after a severe cold snap sent prices spiraling 1.8% in January, a 15-year record.

The Labor Department’s producer price index for finished goods, one stop short of retail, had fallen 0.2% in March and showed no change in February. The monthly numbers are all adjusted for seasonal variations.

For the first four months of the year, wholesale inflation was running at a 4.2% annual rate, down from 4.8% for all of 1989.

“The numbers are increasingly ratifying the fact that we’ve dodged the inflationary bullet, at least for a while,” said Dirk Van Dongen, president of the National Assn. of Wholesaler-Distributors. “The bad news is that maybe the soft landing (economic slowdown) is a little softer than we would like.”

In April, food prices fell 0.6% after an identical 0.6% decline a month earlier. Prices rose for eggs, rice, pasta and pork. They fell for fruit, chicken, cooking oils and candy.

Vegetable prices, which fell 25.5% in March after record increases the previous two months, fell another 31.1% last month. It was the biggest drop since the government began tracking those costs in 1967. Tomato prices fell 73.3%.

“They are no longer boxing tomatoes in Florida because the boxes are worth more than the tomatoes. . . . Thus the winter freeze is nothing more . . . than a bad memory,” said economist Donald Ratajczak of Georgia State University.

Energy prices dropped 1.7% after declining the two previous months. Gasoline prices, with the start of the warm weather driving season, climbed 2.2%. However, fuel oil fell 1.9% while natural gas dropped 5.5%.

Excluding the volatile food and energy sectors, prices rose a modest 0.2% after rising a moderate 0.3% in March. Economists said this “core” number is often a better indicator of underlying inflationary pressures in the economy.

Automobile prices fell 0.9% in April. Clothing price inflation recovered from increases a month earlier. Women’s, men’s and boys’ clothing costs were unchanged. Girls’ and infants’ clothing fell 0.2%.

Prices rose for medicines, soap, floor coverings and toys. They fell for alcoholic beverages, jewelry and magazines.

Despite the moderate report for April prices at the wholesale level, economists are still concerned that inflation may be accelerating this year.