Wholesale Prices Edge Lower
WASHINGTON (
) -- Prices at the wholesale level slid during February, according to the government, reflecting a sharp drop in energy prices and suggesting inflation was kept in check.
The producer price index, which measures prices received by makers of goods and services in the U.S., fell by a seasonally adjusted 0.6% last month, according to the Labor Department. A group of analysts polled by
Reuters
expected the index to drop 0.2%.
In January, wholesale prices advanced 1.4%, following a 0.4% jump in December.
Food prices rose 0.4% in February, while energy prices slumped 2.9%. But after stripping out both measures, which are often characterized by wild swings, the so-called "core" producer price index edged higher by only 0.1%, landing largely in-line with expectations.
Market observers are keeping close tabs on inflation measures since a substantial jump in prices are but one trigger that may lead the
Federal Reserve
to raise its key interest rate. Wednesday's wholesale price results seem to solidify the Fed's decision to keep its fed funds rate at its current historically low levels.
On Tuesday, a statement from the
Federal Open Market Committee
signaled, yet again, that "inflation is likely to be subdued for some time." The group also reiterated that the benchmark rate would stay at "exceptionally low levels... for an extended period." But Kansas City Fed president Thomas Hoenig was the lone dissenter in the statement, disagreeing with the "extended period" language because of inflation concerns.
Market watchers will also get a look at consumer prices on Thursday. Early estimates call for the consumer price index to rise 0.1% and core prices to increase by the same amount.
--Written by Sung Moss in New York
