Producer Prices Decrease for First Time in a Year

Ty Wright/Bloomberg News

Wholesale prices in the U.S. unexpectedly fell in September for the first time in a year, propelled by a drop in fuel costs that continues into this month, the Labor Department reported.

The 0.1% decrease in the producer price index was the first decline since August 2013 and compares with the 0.1% gain median forecast of economists surveyed by Bloomberg. The so-called core measure, which strips out volatile food and fuel, was unchanged.

Oil costs plunged to a four-year low yesterday on concerns about slowing global growth, a sign prices in the production pipeline may stay muted. The lack of inflation pressures gives Federal Reserve policy makers room to keep interest rates near zero even as they’re on pace to end their unprecedented monthly bond purchases this month.

The median estimate for producer prices was based on a survey of 71 economists. Projections ranged from a drop of 0.2% to an advance of 0.4%. Wholesale prices excluding food and energy were forecast to rise 0.1% after a similar gain in August.

Over the past 12 months, wholesale prices climbed 1.6% following a 1% increase the prior month. Core producer costs were also up 1.6% from September 2013.

The producer price gauge is one of three monthly inflation reports, along with the consumer price index and the import cost measure, released by the Labor Department.