WASHINGTON — Wholesale prices dropped sharply in July, and over the past 12 months fell by the largest amount in more than six decades of record keeping.

The Labor Department said today that wholesale prices dropped 0.9 percent last month. That's triple the decline economists had expected and was driven by big decreases in both energy and food costs. Over the past 12 months, the prices of goods before they reach store shelves fell 6.8 percent.

Core inflation, which excludes energy and food, also was well-behaved. It dropped 0.1 percent in July, better than 0.1 percent gain economists expected.

With inflation under control, some may worry about a dangerous bout of falling prices that can also drive wages down, but most economists said deflation remains a remote threat. The last period of deflation in the U.S. occurred in the 1930s during the Great Depression.

Meanwhile, housing starts and applications for future projects both dipped unexpectedly last month, a sign that the building industry's recovery from the prolonged housing slump is likely to be bumpy and gradual.