WASHINGTON — U.S. consumer prices were flat in July as energy costs retreated following a big surge in June. Over the past 12 months, prices dropped the most in nearly six decades as the recession and lower energy costs kept a lid on inflation.

The Labor Department said yesterday that consumer prices showed no change in July, in line with analysts' expectations and far below the 0.7 percent jump in June.

Prices fell 2.1 percent over the past 12 months, the biggest annual decline since a similar drop in the period ending in January 1950. Most of the past year's decline reflects energy prices falling 28.1 percent since peaking in July 2008.

RISE IN PRODUCTION MORE THAN EXPECTED

WASHINGTON — Production from the nation's factories, mines and utilities rose more than expected in July, with the first gain in nine months driven by increased output from auto companies.

The increase provides more evidence that the worst recession since World War II is easing. It marks only the second gain in industrial production since the downturn began in December 2007.

The Federal Reserve said yesterday that production rose 0.5 percent in July, after falling 0.4 percent in June. Economists expected a 0.3 percent increase, according to Thomson Reuters.

ENERGY PRICES DOWN AS OIL TAKES TUMBLE

NEW YORK — Energy prices finished the week sharply lower, giving up more than 4 percent yesterday on evidence that consumers are unlikely to take the lead in an economic recovery.

Oil, which has been propped up by optimism that people will begin spending more, tumbled after a week-ending report suggested those hopes may be premature.

Benchmark crude for September delivery lost $3.01 to settle at $67.51 a barrel on the New York Mercantile Exchange, a low point for the month. In London, Brent prices gave up $1.07 to settle at $72.41 a barrel on the ICE Futures exchange.

FEDS CLOSE COLONIAL, 4 OTHER BANKS

WASHINGTON — Regulators yesterday shut down real estate lender Colonial BancGroup Inc. in the biggest U.S. bank failure this year and also closed four banks in Arizona, Nevada and Pennsylvania.

The closures boosted to 77 the number of federally insured banks that have failed in 2009.

The Federal Deposit Insurance Corp. was appointed receiver of the banks: Montgomery, Ala.-based Colonial, with about $25 billion in assets; Community Bank of Arizona, based in Phoenix; Union Bank, based in Gilbert, Ariz.; Community Bank of Nevada, based in Las Vegas; and Dwelling House Savings and Loan Association, in Pittsburgh.

The FDIC approved the sale of Colonial's $20 billion in deposits and about $22 billion of its assets to BB&T Corp., based in Winston-Salem, N.C. The failed bank's 346 branches in Alabama, Florida, Georgia, Nevada and Texas will reopen at normal times starting today as offices of BB&T, the FDIC said.