Fall in prices boosts Wall Street

Shares on Wall Street got a further boost from figures showing that prices charged by manufacturers had dropped for the fifth month running in May. With economists saying that the US economy has reached the "nirvana" of strong growth and no inflation, the Dow Jones index was up another 57 points at 7,768.47 by late morning, following six successive days of setting new records.

Producer prices fell by 0.3 per cent in May rather than increasing slightly as expected. It is the first time in 45 years that they have fallen for so many months running. Computer and car prices tumbled during the month, although seasonal food prices jumped sharply. The only slight shadow on the figures was a 1.3 per cent increase in prices paid for materials, but analysts said this did not mean any inflationary pressure was imminent. Following last Friday's smaller jobs increase and weaker retail sales reported earlier this week, yesterday's figures made it look much less likely that the Federal reserve will increase interest rates at its next meeting in July.