Wholesale Prices Up a Slight 0.1% : Economy: Drop in new car prices helps offset October increases in fruit, vegetables and gasoline.

Inflation at the wholesale level inched up a slight 0.1% in October as the biggest drop in new car prices in two years helped to offset large price gains for gasoline, fruits and vegetables, the government reported Tuesday.

Economists said the slight rise in the Labor Department’s producer price index, which measures cost pressures before they reach consumers, showed that the weak economy was keeping inflation well in check, although there were a number of cross currents.

Hurricane Andrew, which devastated crops in South Florida, contributed to big increases for various fruits and vegetables, while gasoline costs were boosted by a new federal regulation requiring cleaner, more expensive gasoline for many urban areas.

But economists noted that even with these one-time price jolts, wholesale prices have risen just 1.9% at an annual rate so far this year, and the so-called core rate of inflation, excluding food and energy costs, actually fell in October for the third time in the last five months.

“The industrial sector has essentially been in recession since 1989--three times longer than a normal downturn--and that has basically snuffed out inflationary pressures,” said David Jones, an economist at Aubrey G. Langston & Co., a New York securities dealer. “Inflation is just not a problem for the economy at the moment.”

Normally, a weak economy and low inflation would translate into further interest rate cuts by the Federal Reserve.

While some economists said they still expected additional rate cuts, others were not sure, saying the central bank may be hesitant to do more until the outline of President-elect Bill Clinton’s economic stimulus package is better known.

The 0.1% rise in wholesale prices, the smallest since a similar August increased, followed a 0.3% September advance.

Economists said the gain would have been 0.2% last month were it not for a 2.3% drop in new car prices. It was the biggest drop in car prices since October, 1990, and was attributed to the weak economy continuing to severely depress demand.

Vegetable prices skyrocketed 27%, while fruit prices were up 8.9%. Analysts blamed both increases in part on Hurricane Andrew, which damaged crops in South Florida.

Despite these big advances, the overall food category showed only a modest 0.1% rise as various categories showed declines, led by a record 10.5% drop in fish prices, beating the old mark set in October, 1954.

Producer Price Index for Finished Goods Seasonally adjusted change from prior month Oct., ‘92: +0.1% Sept., ‘92: +0.3% Oct., ‘91: +0.2%