Wholesale Prices in U.S. Decreased in February on Fuel, FoodShobhana Chandra
Wholesale prices in the U.S. fell in February, held down by lower fuel costs that have kept inflation languishing below the Federal Reserve’s goal.
The 0.2 percent decline in the producer-price index matched the median forecast of economists surveyed by Bloomberg and followed a 0.1 percent rise the prior month, Labor Department figures showed Tuesday in Washington. Costs were little changed over the past 12 months after falling 0.2 percent in the year ended January.
Low energy prices and the stronger dollar indicate wholesale price pressures will remain muted. Central bank officials, who’ve 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 Tuesday showed retail sales fell in February for a second after a previously reporter gain in January was revised down, calling into question the narrative that bigger gains in consumer spending would propel economic growth at the start of 2016.
Purchases fell 0.1 percent last month after dropping 0.4 percent in January, according to data from the Commerce Department. The January reading was previously reported as a 0.2 percent gain.
Projections for producer prices in the Bloomberg survey of 65 economists ranged from a drop of 0.4 percent to an advance of
Energy prices fell 3.4 percent, with gasoline decreasing
15.1 percent, according to the Labor Department’s report. Food costs fell 0.3 percent, including a 19 percent plunge in vegetables that was the biggest since April 2011.
Excluding food and energy, wholesale prices were little changed following a 0.4 percent advance. Those costs were up 1.2 percent from February 2015.
Also eliminating trade services, producer costs rose 0.1 percent in February, and were up 0.9 percent over the past year. Some economists prefer this reading because it strips out the most volatile components of PPI.
The producer price gauge is one of three monthly inflation reports released by the Labor Department, the other two 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 on Wednesday, probably declined in February, according to the Bloomberg survey median.