US wholesale prices fell for a third straight month, the Labor Department said on a Thursday report. Wholesale prices dropped 0.5 percent in June, following declines of 0.1 percent in April and 0.3 percent in May, the Labor Department reported. Core inflation, which excludes food and energy, posted only a 0.1 percent increase. The third month of declines in Labor's Producer Price Index raised new concerns about the possibility of deflation, a prolonged period of falling prices which has not been seen in the United States since the Great Depression of the 1930s. The news comes as the Federal Reserve on Wednesday released a new economic outlook in which it lowered its growth forecast and also trimmed an already low projection for inflation, underscoring the view that it still sees fighting weak growth as its primary mission at the moment. For June, food costs fell 2.2 percent, the biggest decline since April 2002-reflecting major prices drops for vegetables, led by a big decline in the price of tomatoes, which are now retreating after an earlier weather-related jump in prices. Energy costs dropped 0.5 percent, the third straight fall, as lower global crude oil prices have pushed energy prices lower. The cost of gasoline dropped 1.6 percent in June while home heating oil fell 8.1 percent, the biggest decline in 11 months. The overall June decline in prices was the third consecutive monthly drop, the longest stretch since a similar three-month fall from October through December 2008, a period when extreme turbulence in financial markets sent the economy into a tailspin. The 0.1 percent rise in core wholesale inflation, excluding food and energy, followed two months of 0.2 percent increases. Over the past 12 months, core inflation has risen by just a very modest 1.1 percent. The price of heavy duty trucks rose 2.5 percent in June, the biggest increase in three years, and cigarette prices rose 1.4 percent, but the price of light trucks, the category that includes sport utility vehicles, dropped by 1 percent.
