Prices at the producer level edged up 0.2 percent last month, following a slight drop in February, as falling farm prices, declining oil costs and increasing imports continued to hold inflation down.

The producer price index for finished goods during the last 12 months was up 0.3 percent, the smallest 12-month rise in 20 years, the Labor Department reported. The index had dropped 0.1 percent in February and was unchanged in January.

Economists said there seemed to be little chance of raging inflation in the next couple of years, and that the decline in the value of the dollar seemed to be the greatest threat. Slack still remains in productive capacity and in the labor market, and oil prices are not expected to rise, economists said.

Gasoline prices, which declined 0.8 percent last month, were 9 percent lower this March than they were a year ago, the Labor Department said.

"At the producer level we have practically no inflation," said Robert Ortner, the Commerce Department's chief economist. "Goods back at the wholesale level on balance are not rising very much."

In a separate report, the Commerce Department said business inventories rose 0.4 percent in February, following a 0.3 percent rise in January, suggesting further slack in factory production in the future. Business sales in February increased 0.2 percent following a 0.6 percent decline in January.

Another report, from the Federal Reserve Board, showed that consumer credit in February expanded at a 27.1 percent annual rate, the largest one-month increase on record.

The February increase followed a 19.2 percent rise in January. Ordinarily, such an expansion would raise fears of inflation as more and more dollars chased available goods. However, imports are absorbing a large amount of that credit, economists said, increasing the slack in domestic production.

Automobile credit outstanding grew $3.84 billion in February, following a $2.89 billion rise in January. Revolving credit, which includes retail and bank card borrowing, increased $2.53 billion in February following a $1.96 billion rise in January.

The big difference between the small price increases at the producer level and the larger inflation at the consumer level -- consumer prices are increasing at about a 4 percent rate -- is that the costs of services are moving much higher, Ortner and other economists said.

"We don't have inflation catching on much at all," said Kurt Karl, an economist with Wharton Forecasting Services. "A lot depends on the dollar."

Karl said that the prices of crude materials at the bottom of the production chain -- which have declined 7.6 percent since March 1984 -- would begin to rise quickly if the dollar declined greatly. One reason for the continuing decline in crude goods prices is that the strong dollar, which makes them expensive overseas, is reducing demand.

However, Karl said that while other crude prices might rise if the dollar falls, the price of oil is not expected to change much.

Prices at the crude level last month declined 1.5 percent, and the cost of intermediate goods with some processing declined 0.2 percent. Both of those indexes have declined each month this year.

For the 12 months ended in March, food prices declined 0.9 percent and the index for energy products declined 8.4 percent, Labor said. The index for consumer goods other than foods and energy rose 2.4 percent during the last 12 months, and capital equipment prices rose 2.5 percent during that period.

During March, prices rose for women's and children's clothing, household furniture, newspapers, soaps and detergents, toys and children's vehicles and luggage and small leather goods, Labor said.

Prices for passenger cars and prescription drugs rose but at a slower pace than in the previous month.

Prices for consumer foods declined 0.2 percent following 0.6 percent drop in January and a 0.1 percent decline in February. Prices fell for beef, veal, fish and fresh fruits, although they rose for fresh and dried vegetables, pork and processed fruits and vegetables.

Prices for finished energy goods dropped 0.9 percent, following a 2.5 percent decline in February. The index for home heating oil rose after falling for four consecutive months. The index for natural gas, however, dropped after a slight rise in February, the Labor Department said.

Capital equipment prices rose 0.4 percent in March, about the same as in each of the first two months this year, Labor said. Motor vehicles and metal cutting machine tools led the increases.