Producer Prices Drop for 4th Month

WASHINGTON — U.S. producer prices are falling, despite robust national economic growth and the lowest jobless rate in a quarter century.

The Labor Department reported Wednesday that declining food and energy costs helped push down the producer price index for finished goods by 0.6% last month, the fourth monthly drop in a row. That left the index, which measures the prices manufacturers charge to sell goods they produce, just 0.8% higher than it was in April 1996.

Furthermore, if volatile food and energy prices are excluded, the remaining core portion of the PPI tricked down by 0.1% last month and was only 0.6% above its year-earlier level.

Bond prices immediately shot up after the figures were released, pushing down interest rates in money markets and leaving the yield on the 30-year Treasury bond at 6.88%. The Dow Jones industrial average, which rose by as much as 77 points during the morning on the news, faltered later and closed the day at 7,286.16, up just 11.95 points.

Analysts said investors were encouraged by the report, which made it appear less likely that Federal Reserve Board members would raise short-term interest rates at a policy-making session Tuesday.

Other recent reports, such as one from the Commerce Department this week showing retail sales down 0.3% last month and flat in March, point to such a slowing.

The consumer price index for April is to be released today. A number of analysts expect it to be up by a modest 0.1% or 0.2%.

The April drop in producer prices was broad-based. Passenger car prices charged by auto makers fell 0.5%, computer prices were down 4.1%, prescription drugs were down 0.7%, eggs were off 11.3%, dairy products 1% and civilian aircraft 2%. Fresh vegetable prices, which had jumped more than 30% during the previous three months, fell 20.4% last month.

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Producer Prices

Index of finished goods prices; 1982=100; seasonally adjusted:

April: 131.6

Source: Bureau of Labor Statistics