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Producer prices ease 0.1%
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July 10, 1998: 9:19 a.m. ET
June wholesale prices slide on Asia ripple effects; core rate rises 0.2%
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NEW YORK (CNNfn) - Prices at the wholesale level dipped in June, the U.S. Labor Department said Friday, amid signs that Asian turmoil has begun rippling across the consumer economy, eroding prices for energy, commodities and industrial machinery.
The producer price index slid 0.1 percent, its first decline in three months, after a 0.2 percent rise in May. The core producer price rate, however, which excludes the volatile food and energy sectors, rose 0.2 percent. Energy prices fell 1.7 percent in June.
That marked the eighth decline in energy prices in nine months; the overall producer price index has fallen 0.8 percent in the 12 months through June.
Analysts said the overall decline, which was in line with Wall Street expectations, pointed to Asia's strengthening stranglehold on overseas prices.
"The main point is that the Asian shock is creating deflationary pressures throughout many commodities as well as energy, so I think this is long-lived," said William Hummer, a market economist with Wayne Hummer Investments.
"There's no end in sight as the Asian crisis will go on for years and this is having a major effect," Hummer added. "It will trim earnings probably more substantially than many economists expected."
The bond market, already distracted by a Chinese threat to devalue the yuan and renewed Japanese waffling on economic reform, fell on the new PPI numbers after initially treading water. The 30-year benchmark Treasury slipped 6/32 in price, nudging the yield up to 5.62 percent.
Gasoline prices remained unchanged last month while heating oil prices slid 8.1 percent. Crude goods were down 1.4 percent, though the decline narrowed to 0.5 percent when the food and energy sectors were excluded.
Passenger car prices rose 0.3 percent. Food and tobacco prices both edged up 0.1 percent.
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