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Wholesale in-fla-tion turned in its best performance in five months as energy and food costs declined, helping to keep the overall price level from rising at all in March.

The Labor Department said Tuesday that its Producer Price Index, which measures inflationary pressures before they get to the consumer, was unchanged last month after posting 0.3 percent increases in both January and February.It was the best showing since wholesale prices actually fell by 0.4 percent in October. In advance of Tuesday's report, many economists had been expecting a moderate rise of around 0.2 percent.

Financial markets rallied on the good performance. Prices of long-term bonds, which respond quickly to any hint of inflation, soared on the benign wholesale price report with demand for the benchmark 30-year Treasury bond pushing its yield down to 7.36 percent, from 7.39 percent early Tuesday.

"These are terrific numbers," said Eugene Sherman, economist at M.A. Schaprio & Co. Inc. in New York. "From the point of view of consumers, inflation is not a problem and it does not loom as a problem."

Many economists are predicting that widespread signs that economic growth has slowed this year provide evidence that the Federal Reserve's string of seven interest rate increases are beginning to have their desired effect of slowing the economy and keeping inflation under control.

But they caution that regardless of whether this "soft landing" scenario turns out to be correct, inflation at both the wholesale and retail levels will be higher than it was last year.

So far this year, wholesale prices have been rising at an annual rate of 2.6 percent, compared with an increase of just 1.7 percent for all of 1994. Consumer prices rose just 2.7 percent last year, the third straight year retail prices have been under 3 percent, which has not happened since the mid-1960s.