Saturday, December 13, 2003

Wholesale prices dip by 0.3%

Trade deficit hits new high

By Jeannine Aversa
The Associated Press

WASHINGTON - Wholesale prices retreated by 0.3 percent in November, pulled down by falling costs for gasoline, beef and cars, suggesting that the economy's resurgence isn't fanning inflation.

The decline in the Producer Price Index, which measures prices before they reach stores, came after prices rose by 0.8 percent in October, the Labor Department reported Friday. That jump had unsettled some analysts who worried whether the seeds of inflation were being planted and may take root down the road.

Economists were expecting wholesale prices to calm down in November after October's big increase. But they were forecasting a tiny, 0.1 percent rise.

The 0.3 percent drop marked the first decline in wholesale prices since May.

"There is no inflation threat to the current economic rebound. None whatsoever," Mark Zandi, chief economist at, said.

Excluding energy and food prices, which can swing widely from month to month, "core" wholesale prices dipped by 0.1 percent in November, down from a 0.5 percent advance in October. Analysts were expecting core prices for last month to be flat.

In another report, the Commerce Department said the trade deficit soared to $41.77 billion in October. Shoppers' preference for imports hit a record high, offsetting a sizable gain in exports, including the best showing for sales of farm products in seven years. The October trade imbalance was up 1 percent from a September deficit of $41.34 billion and was the biggest deficit number in five months.

On Wall Street, stock prices continued up after the Dow Jones Industrial Average topped 10,000 Thursday for the first time in 18 months. The Dow was up 34 points to 10,042.16. The Standard & Poor's 500 Index was up 2.93 to 1074.14.

Because inflation has been tame, the Federal Reserve, at its last regularly scheduled meeting of the year Tuesday, held a key short-term interest rate at a 45-year low of 1 percent and suggested it could stay there for some time.

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