Producer Prices Unexpectedly Fall 0.1% in July

n a report showing that inflation is not currently a threat to the economy, the Labor Department said Friday its producer price index declined 0.1% in August, as the cost of vehicles and gasoline fell.

The decrease in the measure of prices paid to factories, farmers and other producers followed a 0.1% rise in July. Economists expected a 0.2% rise in the index, Bloomberg reported.

Labor also said the core rate, which excludes food and energy, fell 0.1% percent, the first drop since February.

The report also found that gasoline prices declined 5%, food prices fell 0.2%, prices for capital equipment fell 0.1% and computer prices declined 1.7%.

Although raw materials prices are 22% higher than a year earlier, companies have been reluctant to pass higher prices along in order to stay competitive, Bloomberg said.

Wholesale prices rose 3.4% in August from a year earlier. The core PPI is 1.5% higher than August of last year.

So far this year, producer prices are rising at a 3.8% annual rate compared with a 4.6% increase at the same time last year.

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