Producer prices fall almost 1%

 WASHINGTON (Reuters) -- U.S. producer prices fell by a larger-than expected amount in July and notched a record decline compared with a year earlier as gasoline prices plummeted, government data Tuesday showed.

The Labor Department said the seasonally adjusted index for prices paid at the farm and factory gate dropped by 0.9% versus a 1.8% gain in June.

Analysts polled by Reuters had expected producer prices to decline by 0.3% last month.

Compared with the same period last year, producer prices were a record 6.8% lower in July. They had been forecast to decline by 5.9%.

The longest U.S. recession since the Great Depression of the 1930s has crushed demand and pummeled prices throughout the economy, keeping inflation pressures firmly at bay despite massive official efforts to stimulate growth.

Core producer prices, which exclude food and energy costs, edged 0.1% lower in July compared with a forecast for a 0.1% rise, and after a 0.5% increase in June.

The core producer price index stood 2.6% higher measured on a year-on-year basis, versus a forecast for a 2.8% advance.

The Labor Department said that gasoline prices fell 10.2% in July and were down 45.2% versus a year ago, while finished energy goods overall fell by 2.4% on the month and 29.7% over the past year.

Capital equipment prices edged down 0.2% in July but were up 1.8% over the year.

Earlier in the production process, prices received by manufacturers of intermediate goods fell by 0.2% in July after rising 1.9% the month before. The crude goods index was down 4.5% after a 4.6% rise in June.