US wholesale prices slid 1.4% in February on a sharp retreat in energy costs, the government reported today in a report that offered a mixed picture on inflation.

The decline in the producer price index (PPI), the biggest in three years, was far steeper than the 0.2% forecast by Wall Street analysts.

But the 'core index', which excludes volatile food and energy prices, rose 0.3%, a bigger increase than the 0.1% rise expected on Wall Street.

The Labor Department report showed a 4.7% decline in overall energy prices, which was the main factor in the sharp decline in prices. Petrol prices fell 11%, the most since April 2003, just after the invasion of Iraq. Natural gas prices fell 4.1%, the most since October 2001.

Wholesale energy prices are up 17% in the past 12 months. In the past year, the PPI has risen 3.7%. The core rate has accelerated to a 1.7%increase in the past 12 months, compared with 1.5%.