U.S. Producer Prices Climb, Trade Shortfall Grows

By Agence France-Presse Rising energy costs pushed up U.S. wholesale prices by a sharper-than-expected 0.5% in June when compared to May, Commerce Department figures showed July 11. Stripping out volatile food and energy costs, however, core producer prices eased 0.1%, defying Wall Street economists' expectations of a small increase. Finished energy goods prices surged 3.4% in the month, with gasoline jumping 7.6% while home heating oil and liquefied petroleum gas prices each shot up 9.0%. Food prices climbed 4.5%. Civilian aircraft prices rose 1.1%, the largest gain since January 1995. But prices of cars declined 0.7%, light trucks fell 1.5% and communication equipment dropped 0.7%. Shifts in producer prices, which are often absorbed by companies rather than passed on to consumers, are under scrutiny because of fears about deflation taking grip on the tepid U.S. economy. The U.S. Federal Reserve last month cut key interest rates to a 45-year low to fend off deflationary pressures, although policymakers have described the threat as remote. In trade, the U.S. shortfall widened modestly in May, fuelled by bulging imports of cars and industrial supplies, according to the Commerce Department. The shortfall grew to $41.84 billion in May from $41.65 billion in April. Imports climbed $910 million, or 0.7%, to $123.89 billion, while exports expanded $719 million, or 0.9%, to $82.05 billion. Copyright Agence France-Presse, 2003