Wholesale Prices Post Smallest Increase in Three Months

Wholesale prices in November posted their smallest increase in three months as lower costs for heating oil and prescription drugs tempered higher prices for natural gas and fresh vegetables.

The Labor Department said Thursday that its producer price index, which measures prices paid to factories, farmers and other U.S. producers for their goods, inched up a seasonally adjusted 0.1% last month, down from a 0.4% rise in October.

The report also showed that the less volatile core rate of inflation, which excludes food and energy, was flat in November following a 0.1% decline, suggesting that inflation is well contained.

The tame numbers made for a better reading on inflation in November than many analysts were expecting.

Wholesale prices this year have been rising at an annual rate of 3.9%, compared with 2.9% in 1999, mostly on surging energy costs.

But energy prices rose 0.4% in November, down from a 1.4% rise in October.

Heating oil prices fell by 1.9% and residential electric prices decreased 0.7%, helping to blunt a 1.4% rise in gasoline prices and 1.2% jump in natural gas prices.

In other reports:

* The United States’ deficit in the broadest measure of trade climbed to a record $113.8 billion in the third quarter, reflecting Americans’ robust appetite for foreign goods and more expensive imported oil.

* New claims for state unemployment insurance fell by a sharp 32,000 to a seasonally adjusted 320,000 last week, but still hovered at a level suggesting that the nation’s red-hot labor market was cooling.

* Business inventories rose by 0.6% in October as sales fell, another indication that the economy was slowing.