Summary Box: Wholesale prices signal low inflation

WHAT HAPPENED?: Wholesale inflation dropped 0.9 percent in July, reflecting big declines in energy and food costs. Construction of single-family homes rose for a fifth straight month, though overall housing construction fell 1 percent because of weakness in apartment building.

WHAT’S IT MEAN?: The big drop in wholesale prices, after a report last week showing consumer prices were flat in July, provided more evidence that inflation poses no threat. The weak economy has limited the ability of businesses to raise prices. The strength in single-family construction showed housing is rebounding, though construction remains more than 70 percent below its 2006 peak.

WHAT’S NEXT FOR THE ECONOMY?: Economists think inflation will remain tame for months to come, giving the Federal Reserve leeway to keep a key interest rate at a record low as the economy struggles to recover. Yet any sustained housing recovery still faces obstacles, including record foreclosure levels and high unemployment.