Wholesale prices stayed level in May, the second consecutive month without any business inflation, the Labor Department reported Friday. The rare two-month interruption in the rise of the Producer Price Index kept the business inflation rate so far this year at 3.5 percent, well below the 5 to 6 percent range 1984 forecast.Skip to next paragraph
Subscribe Today to the Monitor
This ''certainly suggests that there is a lot of competitive pressure'' on businesses to keep prices low, says Charles Liberman, vice-president and senior economist at Shearson Lehman/American Express. Although ''inflation is going to be a lot better behaved'' than the worst-case scenarios imply, he says, other factors supporting interest rates - the demand for credit and federal budget deficit - will have to improve before rates come down significantly.
The Producer Price Index for finished goods was 291.5 in May. This index does not directly reflect consumer prices but shows how much or how little pressure business is under to mark up retail price tags in the near future.