Sharp fall in US producer prices
By Lucia Mutikani |
March 18, 2010, Thursday
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Print Edition
Print Edition
PRODUCER prices in the United States fell more steeply than expected in February, posting their biggest drop in seven months as energy costs tumbled, according to a government report yesterday that pointed to scant inflation pressures.
The Labor Department said the seasonally adjusted index for prices paid at the farm and factory gate fell 0.6 percent, the largest decline since July, following a 1.4 percent rise in January.
Analysts polled by Reuters had expected producer prices to fall 0.2 percent last month. Compared to February last year, they increased 4.4 percent, slowing from a 4.6 percent rise in January.
The report came a day after the Federal Reserve renewed its promise to hold benchmark interest rates exceptionally low for an extended period, arguing that substantial resource slack would likely keep inflation subdued for some time. It left overnight interest rates in a range of zero to 0.25 percent.
The Labor Department attributed the February decline in wholesale prices to a 2.9 percent drop in energy costs, which was also the largest decline in seven months and represented a sharp reversal from January, when energy costs surged 5.1 percent.
Gasoline prices plummeted 7.4 percent after an 11.5 percent rise in January. Food prices rose 0.4 percent after rising by the same margin in January. Stripping out volatile food and energy costs, core producer prices edged up 0.1 percent in February.
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