U.S. wholesale prices fell sharply in July, and over the past 12 months dropped by the biggest amount in more than six decades, the government reported Tuesday. The Labor Department said wholesale prices fell 0.9 percent last month, triple the decline economists had expected. The drop was driven by big decreases in both energy and food costs. Core inflation, which excludes volatile energy and food costs, fell 0.1 percent in July. Wholesale energy prices fell 2.4 percent in July after having risen 6.6 percent the previous month. Gasoline prices fell 10.2 percent, and home heating oil fell 11.9 percent. Wholesale food prices fell 1.5 percent last month, reversing a 1.1 percent rise in June. Over the past 12 months, prices of goods before they reach the retail level fell 6.8 percent, the biggest since the government started keeping such records in 1947. It surpassed the 5.2 percent 12-month decline in the period ending in August 1949. Economists believe that energy prices, which fueled June's gain in wholesale prices, will level out and that the weak economy will keep overall inflation under control. Similarly, the Federal Reserve (Fed) believes inflation will remain subdued for some time as the country struggles to emerge from the worst recession since the second world war.
