Producer Prices Drop in February
There have been concerns about inflation as the economy shows signs of recovery.
In a report that could allay inflation fears, the Labor Department said the wholesale prices dropped 0.6 percent in February, much larger than the 0.2 percent drop economists had predicted.
The drop was the biggest since July and follows a 1.4 percent rise in January. The drop in prices was led by a fall in fuel costs.
Food costs rose by 0.4 percent in February, the fifth straight monthly gain.
Outside of food and energy, the price for new cars increased 0.5 percent, the largest advance since June.
Producer prices are among the most important indicators of inflation.
Paul Dales, an economist at Capital Economics, says the full impact of recession on prices has yet to be felt and hence the Federal Reserve (Fed) will be able to keep interest rates low for the near-term.
The policymakers at the Fed said this week, “inflation is likely to be subdued for some time.”