RTTNews - Wholesale prices fell much more sharply than expected last month, led by a slide in gasoline prices. The report keeps inflation concerns on the back burner. The data suggest that the recession continues to weigh on prices.

The U.S. Labor Department revealed that producer prices dropped 0.9 percent in July. This followed an advance of 1.8 percent in the previous month.

Economists had expected the measure to slip 0.3 percent.

Core prices, which exclude the volatile food and energy sectors, ticked down 0.1 percent in July. Economists were looking for core prices to edge up by 0.1 percent.

Energy prices were down 2.4 percent, the government said, including a 10.2 percent slide in gasoline prices.

Chris Low, chief economist for FTN Financial, noted that the data continues to point toward lower prices, despite concerns that many experts have voiced that significant inflation is just around the corner.

There has been more volatility in prices this year than last, but the prevailing trend remains deflationary, Low said.

He added, Analysts tend to be much too early in looking for inflation after recessions. It appears this recession will be no exception.

There have been fears that the massive amount of stimulus authorities have pumped into the system will lead to a spike in inflation once the economy begins to recover.

Last week, the government released figures on consumer prices - a measure that is a more closely-watched gauge of inflation than producer prices.

The report showed consumer prices unchanged in July compared to the previous month, though they were down 2.1 percent from 2008 levels. Core consumer prices were up 0.1 percent.

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