Prices at the wholesale level plunged 0.4 percent in June as record declines in residential electricity and natural gas prices and a big drop in gasoline costs gave the country the best performance on wholesale prices in more than two years.

The Labor Department reported that the drop in its produce price index, which measures price pressures before they reach the consumer, was the first decline since last August and the biggest drop since a 0.5 percent fall in February 1999.

Analysts had been expecting that inflation would moderate after steep increases earlier this year reflecting a big jump in energy prices. They also said the sharp slowdown in economic activity was helping to ease inflationary pressures as wage demands soften with the rising jobless rate.