MercoPress. South Atlantic News Agency

US July producer prices at their highest in 27 years

United States wholesale prices rose more than twice as fast as expected in July and topped the 1% level for the third month in a row, 1.2%, to become the highest in 27 years, according to statistics released Tuesday by the US Department of Labor.

The producer price index or PPI measure which calculates price hikes for goods and services that companies buy from other firms, is often considered to be a measure of future retail inflation. The July PPI was 16% higher than the same month last year. After stripping out food and energy, core prices rose by a higher-than-expected 0.7%, the biggest increase since November 2006. Last week it was announced that US inflation rate in July hit its highest level in 17 years, 5.6%. The US Commerce Department added to the downbeat news of Tuesday, reporting that July housing starts fell to an annual rate of 965,000 units â€" higher than analysts predicted, but the lowest level in more than 17 years nonetheless. In June starts had reached 1.08 million. Economists have been studying forward-looking information for signs that the US housing slump was past its worst. However, the Commerce Department data made for grim reading, with the number of construction permits issued - seen as a reliable sign of future activity - down 17.7% on an annual basis. And the number of new homes being constructed last month was down by 39.2% compared with July 2007.