Prices stable, trade deficit soars

Friday, Aug. 13, 2004 | 9:06 a.m.

WASHINGTON -- U.S. producer prices rose less than forecast last month, restrained by cheaper cars and the biggest drop in the cost of food in more than two years, a government report showed today. Energy prices jumped.

The 0.1 percent increase in the measure of prices paid to factories, farmers and other producers followed a 0.3 percent decline in June, the Labor Department said in Washington.

Also, the Commerce Department said the U.S. trade deficit ballooned in June to a record $55.8 billion as imports of crude oil surged and slowing growth in Japan and Europe curbed export demand.

"This poses some significant worries for the economic outlook,"said Joseph Abate, a senior economist at Lehman Brothers Inc. in New York. The widening gap "suggests that demand is being met from foreign rather than domestic production and employment."

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