Roanoke Times
                 Copyright (c) 1995, Landmark Communications, Inc.

DATE: FRIDAY, April 12, 1991                   TAG: 9104120115
SECTION: BUSINESS                    PAGE: B5   EDITION: METRO 
SOURCE: Associated Press
DATELINE: WASHINGTON                                LENGTH: Short

WHOLESALE PRICES SHOW SUSTAINED DROP

The Labor Department said its Producer Price Index, which measures inflation before it reaches consumers, fell 0.3 percent last month, reflecting continued big declines in energy prices.

In addition, the government said new claims for unemployment benefits, while dropping below 500,000 for the first time in three weeks, still remained at a recession level of 473,000 for the last week in March.

The 0.3 percent drop in wholesale prices in March left prices declining at an annual rate of 3.9 percent for the first three months of this year, sharply below last year's 5.6 percent rise, an increase blamed on the big increase in energy prices after Iraq's Aug. 2 invasion of Kuwait.

So far this year, energy prices have been falling at a steep annual rate of 35.4 percent as oil prices retreated from the levels reached in the months immediately after the invasion.

In further good inflation news, the government said the underlying inflation rate, excluding energy and food costs, rose a modest 0.2 percent - just half of the February gain. Analysts said that bolstered their belief that big gains in the core inflation rate in January and February had been based on temporary factors.

"Anyone reading this report can't be saying that inflation is about to roar off," said Donald Ratajczak, head of the forecasting unit at Georgia State University.

He said he was expecting the Consumer Price Index for February to be up about 0.1 percent when it's released today.