Prices charged by producers of finished goods were unchanged in June, completing a six-month period in which they fell at an annual rate of 6.5 percent, the fastest decline since such records were begun in 1947, the Labor Department reported yesterday.
Meanwhile, major commercial banks across the country cut their prime lending rates from 8.5 percent to 8 percent in the wake of the Federal Reserve Board's decision Thursday to lower its discount rate by half a percentage point to 6 percent.
At 8 percent, the prime rate, a reference rate to which many business loans and a growing number of consumer loans are tied, is at its lowest level since May 1978. The Fed's discount rate -- the interest rate the central bank charges on loans to financial institutions -- at 6 percent is the lowest it's been in 8 1/2 years.
The Federal Reserve cited weak worldwide commodity prices as one factor behind the discount-rate reduction.
While many economists expect producer prices to begin to rise later this year, the June figures indicate that inflation should remain moderate, analysts said. For instance, Wharton Econometric Forecasting Associates predicts finished-goods prices charged by producers will go up at only about a 1.5 percent rate during the rest of 1986.
White House spokesman Larry Speakes called the Labor Department report showing prices unchanged last month "good news for all Americans." Speakes said that the absence of inflation could pave the way for lower interest rates, "and that, in turn, leads to sustained growth."
Allen Sinai, chief economist at Shearson Lehman Bros., said that lackluster economic growth in the United States and many other countries is holding down prices. "There is so much slack in the U.S. and world economies that basic commodity prices remain under tremendous downward pressure," he declared.
And many economists expressed concern that the half-point cut in interest rates would do little to spur the economy. "It won't be dramatic, but it will be just one more bit of stimulus to get the economy going," said Kathleen Cooper, chief economist for Security Pacific Corp., a Los Angeles bank-holding company.
Such comments represent a major shift from the view being expressed by many economists and policy makers only a short time ago. For instance, the policy record of the May 20 meeting of the Federal Reserve's policy-making group, the Federal Open Market Committee, released yesterday by the Fed, showed that a majority expected a swift acceleration in activity.
As a result, the FOMC said officials carrying out day-to-day central bank operations in the money markets should be alert to the need to tighten credit conditions slightly "if business indicators gave a clear signal of a pickup in the rate of economic expansion. . . . "
There has been no such clear signal since that meeting, of course, and the Fed has acted to lower interest rates.
A senior administration economist said yesterday, "The fundamentals all indicate a pickup. The fundamentals haven't gone negative. They're as positive as ever."
But the fundamentals of lower inflation, lower interest rates and a lower value of the dollar on foreign-exchange markets -- which should encourage U.S. exports while discouraging imports -- have not been translated into more orders for American-made goods, the economist said.
"I still think you will get the pickup," the administration economist continued, "but growth in the second half, to the extent you get a pickup, is likely to be less than we expected earlier." However, growth should be stronger than 4 percent in 1987, the economist added.
Asked what might be needed to spur growth, the official replied, "I don't know that anybody really knows the answer to that. If we could move on the federal budget deficit question, and get this tax bill behind us, it would help," because businesses are postponing capital investments.
"But I don't know of any one thing, such as dropping the discount rate a full percentage point instead of half a point, that would help," the economist said.
The Labor Department report said that finished-goods prices, after falling sharply in the first four months of the year, rose 0.6 percent in May as some energy prices rebounded from lows reached in April. In June, the Labor Department said, they dropped again by 0.6 percent.
Natural-gas prices fell 5.8 percent last month and home-heating oil prices went down sharply for the sixth consecutive month. Heating oil prices in June were only about half their level in December.
Gasoline prices rose 8.6 percent in May and another 2.9 percent in June.
The indexes for producer prices for consumer foods and for other nonenergy goods were both unchanged last month, the department said.