Supplier Prices Rose at Snail’s Pace in 1993 : Inflation: The news bodes well for continued stability on the retail level. Slow increases allay fears of rising interest rates.

U.S. wholesale prices, held down by a dramatic decline in world oil prices, posted a tiny 0.2% increase in 1993, the government reported Wednesday.

In its monthly report on the producer price index, which measures inflation at the wholesale level, the Labor Department said that last year’s figure extends the disinflationary trend of recent years. Producer prices rose 1.6% in 1992 and 0.1% in 1991.

The news sparked a rally in the bond market as the Treasury’s main 30-year bond’s yield fell to 6.175% from Tuesday’s close of 6.23%. Bond prices and yields move in opposite directions.

The index dipped 0.1% in December, the fourth month of decline last year. The report attributed that to falling oil prices. Gasoline prices plunged 10.4% for the month, while overall energy costs declined 3.5%.

Private sector economists warned, however, that oil prices are likely to be stabilized soon and will not drive down producer prices in future months.

Wholesale goods in other categories became more expensive in December. Food prices rose 1.1%, spurred by a whopping 40% gain in prices for vegetables. Fruit prices were up 7% for the month.

Economists said the figures for both December and the full year show the economy is managing to grow gradually without causing a corresponding increase in inflation. Upward pressure on prices builds during periods of economic recovery, particularly when interest rates are unusually low, as they are now.

Another inflation indicator was to be released today, when the Labor Department reports consumer prices for December. Several economists said they expect the retail price figures to mirror the pattern of the wholesale index.

John Tuccillo, chief economist of the National Assn. of Realtors, said he thinks it will be at least a year before the recovery pushes prices high enough to prompt the Federal Reserve Board to raise interest rates.

“There are no pressures in the market this year for inflation,” Tuccillo said. “We have weak economies around the world. We are truly a global economy.”

Others said they believe the Fed could act as early as next month.

“The next move in interest rates is upward,” Ratajczak said. “If economic recovery continues to go up, I think the Fed could raise the rates as soon as next month, although it would be modest.”

But Robert Barr, deputy chief economist at the Commerce Department, said that if the Fed does raise rates, it will do so cautiously.

“We expect the Federal Reserve to allow the rates to go up just modestly, and that will not occur until the middle of 1994,” he said.

Wholesale Prices

Yearly changes in the producer price index, which measures inflationary pressures before they can reach the consumer.

1955: 1.0% 1974: 18.3% 1986: -2.3% 1993: 0.2%

Source: Labor Department