NEW YORK (CNN/Money) - Wholesale prices in the United States were little changed in August, the government said Thursday, indicating inflation continued to be a distant threat to an economy struggling to recover from recession.

The Labor Department said its producer price index, a measure of wholesale inflation, was unchanged after falling 0.2 percent in July. Excluding food and energy prices, "core" PPI fell 0.1 percent after falling 0.3 percent in July. Economists expected PPI to rise 0.2 percent and core PPI to rise 0.1 percent, according to Briefing.com.

Separately, the Commerce Department reported retail sales rose in August, and Reuters reported that the University of Michigan's consumer sentiment index fell in early September.

U.S. stock prices were lower in morning trading, while Treasury bond prices rose.

The PPI report comes before the Sept. 24 meeting of Federal Reserve policy makers, who will decide whether or not to cut interest rates to fight continuing sluggishness in an economy struggling to recover from a recession that began in March 2001.

Tame inflation could mean the Fed -- which must balance economic stimulation with controlling inflation -- will decide it is safe to cut rates.

In fact, with prices so low, some economists have raised the scarier possibility of deflation, in which businesses are unable to raise prices, even as the cost of labor rises. The result would be another slowdown in business spending and another round of layoffs, sinking the economy deeper into a recession that began early in 2001.

A 1.0-percent gain in energy prices supported the broad PPI in August, balancing the effects of a 0.4-percent drop in food prices, a 0.1-percent drop in passenger-car prices and a 1.3-percent drop in light-truck prices.