WASHINGTON -- Prices paid by wholesalers last year recorded the sharpest decline since the 1986 oil collapse, and analysts said a flood of cheap imports from Asia could produce more deflation at the wholesale level this year.
"Inflation is notable by its absence. ... Like Elvis, it's left the stage," said economist Bob Dederick of Northern Trust Co. in Chicago.
In contrast with the 2.3 percent price drop more than a decade ago, the 1.2 percent decrease in 1997 was broad-based, ranging from gasoline to eggs, cars to computers, the Labor Department said Thursday.
Three other reports depicted the economy in slowdown mode:
Consumer debt outstanding decreased in November for the first time in 4 1/2 years, the Federal Reserve said. The 4.1 percent decline to a seasonally adjusted $1.23 trillion was the largest since December 1990, during the recession.
Shoppers turned out in force in December only after stores offered big after-Christmas discounts, major retail chains said. Analysts warned the significant markdowns could eat into retailers' profits.
The number of first-time claims for unemployment benefits jumped by 20,000 last week to 334,000, the highest level since mid-November, the Labor Department said.
Stocks fell sharply Thursday, with another rocky day on Asian markets and another dire forecast from the technology group overshadowing the tame inflation report.
The Dow Jones industrial average fell 99.65 to 7,802.62.
In December, the department's Producer Price Index -- which measures prices paid to producers such as factories and food-processing plants -- fell 0.2 percent. It marked the ninth monthly decline of 1997, matching a record set in 1949.
Economists expect favorable inflation news to continue in 1998 as Asian nations with sharply devalued currencies sell manufactured goods at bargain prices, forcing U.S. competitors to hold or trim theirs.
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