Wholesale Prices Fall 0.3% in June

Wholesale prices and industrial production fell in June, suggesting the economy hit a rough patch and the Federal Reserve can stick with its gradual approach to raising interest rates.

The 0.3% drop in the Labor Department’s producer price index -- the biggest decline in 13 months -- largely stemmed from a retreat in food and energy costs. These costs, which had been surging, had helped to push wholesale prices up 0.8% in May. But June’s decrease also reflected sluggish demand, which made some companies more restrained in their pricing, economists said.

The Federal Reserve, in a separate report Thursday, said production at the nation’s factories, mines and utilities fell 0.3% in June from the previous month. That was the largest decrease since April 2003 and marked a sharp slowdown from May’s 0.9% advance.

Factory output dipped 0.1% last month, restrained by a cutback in car production. Jerry Jasinowski, president of the National Assn. of Manufacturers, called the decline “a predictable breather following robust growth in preceding months.”

In other economic news, new claims for unemployment benefits jumped last week by a seasonally adjusted 40,000 to 349,000, the Labor Department said. In the prior week, claims plunged by 40,000.

Businesses, trying to keep a close eye on customer demand, boosted inventories 0.4% in May, down from a 0.7% increase in April, the Commerce Department said.

On the inflation front, “core” wholesale prices -- which exclude energy and food prices -- rose a modest 0.2% in June, less than May’s 0.3% advance.