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

DATE: SATURDAY, June 10, 1995                   TAG: 9506120053
SECTION: BUSINESS                    PAGE: A-6   EDITION: METRO 
SOURCE: Associated Press
DATELINE: WASHINGTON                                LENGTH: Medium

MAY WHOLESALE PRICES FLAT; INFLATION MIGHT BE SLOWING

``It looks like the price situation is not as bad as before,'' said Samuel D. Kahan, an economist with Fuji Securities Inc. in Chicago. ``If the current weakening of the economy continues, one can assume prices will continue to slow down.''

The Labor Department reported Friday that its Producer Price Index was unchanged in May after a 0.5 percent surge in April that matched the January advance. Many analysts had contended that the April jump was an aberration.

Prices for finished wholesale goods had risen 0.2 percent in February and were flat in March.

Prices for goods still in the production pipeline also reflected little price push in May. Intermediate-goods costs were up 0.2 percent, while prices for crude goods dropped 0.8 percent, the second decline in three months.The latest report showed ``little pickup in inflation pressures,'' agreed economist Bruce Steinberg of Merrill Lynch & Co. in New York. ``Given the sharp slowdown in (economic) activity now taking place, inflation pressures should remain muted.''

The PPI measures inflationary pressures before they reach the consumer. The Consumer Price Index for May will be released Tuesday, and some analysts are predicting a 0.3 percent rise, down from 0.4 percent in April.Wall Street investors ignored the flat PPI report, preferring to focus on statements earlier this week by Federal Reserve Chairman Alan Greenspan that suggested the central bank would not change its interest rate policy soon.

As a result, both bonds and stocks continued to slide. The Dow Jones Industrial Average was down 34.58 to 4,423.99 and 30-year Treasury bonds were off another 1 11-16 point.

The flat PPI performance in May, paced by declines in both the volatile food and energy components, meant wholesale prices for the year were rising at an annual rate of 2.7 percent, compared with 1.7 percent for all of 1994.

The food index fell 0.6 percent, the fourth decline in five months. Energy was down 0.2 percent, the second drop in three months. Excluding food and energy, the so-called core index rose 0.3 percent, reflecting large price increases for tobacco, alcohol and paper goods.The improvement in food prices was widespread, including a 14.1 percent drop in vegetable costs, largest since a 26.6 percent fall in January. Vegetable prices had soared 17.8 percent in April, reflecting the impact of severe flooding in California.

Onion prices declined 65.4 percent; tomatoes, 64.3 percent; asparagus, 47 percent; and sweet corn, 40.7 percent.

Prices fell in other major food areas as well - fish, down 5.8 percent; poultry, down 1.6 percent; and beef and pork, both down 1.1 percent.

The exception was the cost of fresh fruit, which surged by a record 29.8 percent, breaking the previous high of 27.9 percent in July 1950. Lemons were up 22.4 percent; strawberries, 20.6 percent; grapefruit, 12.2 percent; and Valencia oranges, 10 percent.

Energy costs, which had advanced 2.3 percent in April, were held back by a 2.1 percent drop in residential natural-gas prices, the biggest decline since a 0.6 percent fall in May 1994, and an 0.8 percent decrease in electricity.

Gasoline prices rose 2 percent, much slower than the 7.7 percent jump a month earlier. But heating-oil costs were up 9.3 percent.