Wholesale Prices Decrease in February on Fuel, Food
Wholesale prices in the United States fell in February, held down by lower fuel costs that have kept inflation languishing below the Federal Reserve’s goal.
The 0.2% decline in the producer-price index matched the median forecast of economists surveyed by Bloomberg News and followed a 0.1% rise the prior month, Labor Department figures showed March 15. Costs were little changed over the past 12 months after falling 0.2% in the year ended January.
Low energy prices and the stronger dollar indicate wholesale price pressures will remain muted. Central bank officials, who have said they expect inflation to head toward their target, are meeting this week to consider when to raise the benchmark interest rate further after lifting it in December for the first time since 2006.
“Fuel prices are still pushing down on the index,” Gus Faucher, an economist at PNC Financial Services Group Inc. in Pittsburgh, said before the report. “Price pressures at the wholesale level are pretty tame right now.”
Another report March 15 showed retail sales fell in February for a second month after a previously reported gain in January was revised down..
Purchases fell 0.1% last month after dropping 0.4% in January, according to data from the Commerce Department. The January reading was previously reported as a 0.2% gain.
Projections for producer prices in the Bloomberg survey of 65 economists ranged from a drop of 0.4% to an advance of 0.2%.
Energy prices fell 3.4%, with gasoline decreasing 15.1%, according to the Labor Department’s report. Food costs fell 0.3%, including a 19% plunge in vegetables that was the biggest since April 2011.
Excluding food and energy, wholesale prices were little changed after a 0.4% advance. Those costs were up 1.2% from February 2015.
Also, eliminating trade services, producer costs rose 0.1% in February, and were up 0.9% over the past year. Some economists prefer this reading because it strips out the most volatile components of the PPI.
The producer price gauge is one of three monthly inflation reports released by the Labor Department, the others being import costs and consumer prices. Data on March 11 showed import prices fell in February, with the cost of foreign food products joining the slump in fuel.
The CPI, to be released March 16, probably declined in February, according to the Bloomberg survey median.
