Wholesale Prices Down 0.1% in July : Economy: Analysts see the producer price figures as a last respite from inflation before the Iraqi ‘oil shock’ set in.

Wholesale prices in July edged down 0.1%, the government said today in a report seen by analysts as the last respite from inflation before the Mideast crisis sent oil prices soaring.

The slight, seasonally adjusted decline in the Labor Department’s producer price index for finished goods, one stop short of retail, followed moderate gains of 0.2% in June and 0.3% in May.

The drop in July was even better than the 0.1% or 0.2% rise expected by most economists.

“Obviously this number is history,” said economist Donald Ratajczak of Georgia State University. “But what it shows is that, heading into the oil shock, inflation was tame.”

Wholesale prices, which soared in January when a cold snap sent fuel oil and vegetable costs spiraling, have remained virtually unchanged from February through July, helped by six consecutive drops in energy costs.

For the first seven months of the year, wholesale prices advanced at an annual rate of 3%, down sharply from the 4.8% increase for all of last year.

However, in a disclaimer on today’s report, the Labor Department noted that prices were surveyed in mid-July, before the Iraqi invasion of Kuwait.

“The numbers almost appear like the calm beach scene before the shark in ‘Jaws’ arrives,” said Ron Schreibman, vice president of the National Assn. of Wholesaler-Distributors.

Analysts expect that the six-month respite from wholesale price increases will end this month and that prices will remain higher at least for three or four months until the economy absorbs the oil shock.

Crude oil prices, which averaged about $20 a barrel in July, have pushed past $25 since the invasion and gasoline prices are reported up as much as 20 cents at many service stations.