US wholesale prices fall

US factories are charging less for their products

US wholesale prices have fallen to their lowest level in eight years, adding to pressure for a further cut in interest rates.

The US producer price index fell 0.9% in July, partly due to falling prices of oil and other fuel.

The figures, which measure price pressures on goods before they reach shop shelves, were better than Wall Street predictions.

They came on top of a 0.4% drop in wholesale prices registered in June, the US Labor Department reported on Friday.

Six cuts

However, the figures had little positive effect on Wall Street.

In mid-morning trading, the Dow Jones Industrial Average lost 69 points and the high-tech dominated Nasdaq composite index dropped 38 points.

For the first seven months of this year, wholesale prices rose at an annual rate of just 0.5%, a big improvement over the 3.8% increase for the same period a year ago.

If volatile energy and food prices are stripped out, the "core" rate of inflation edged up by 0.2% in July, slightly faster than some analysts were forecasting.

The US central bank, the Federal Reserve, has cut interest rates six times so far this year, in an effort to stave off a recession.

In total, 2.75% has been shaved off base rates.

One of the reasons the Fed has been able to act so aggressively is because inflation has remained under control.