By Kaitlin Schuler
United States wholesale prices fell slightly in February, pulled down by lower energy and food costs, in a performance that suggests inflationary pressures remain under control.
The producer price index dipped a seasonally adjusted 0.2 percent in February, according to the U.S. Bureau of Labor Statistics’ Tuesday report, matching economist expectations. The PPI increased just 0.1 percent in January after declining 0.2 percent in December, and prices remain unchanged from a year ago.
“Core” PPI—which excludes the volatile items of food, energy and trade services—grew 0.1 percent in February after increasing 0.2 percent in January and December.
“Vehicle prices were mixed,” said J.P. Morgan economist Zina Bushra Saijid in an online note. “Prices of passenger cars were weaker than we expected, moving down 0.7 percent, while prices of light trucks rose 0.6 percent.”
Monthly percent changes in PPI, seasonally adjusted
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For the twelve months ended in February, core prices rose 0.9 percent—very low by historical standards — but nonetheless “the largest 12-month advance since a 0.9-percent increase in July 2015,” according to the BLS report. This number remains well below the Federal Reserve’s target inflation rate of 2 percent.
The gasoline index dropped 15.1 percent in February, leading the decline in prices for the month, and the index for fresh and dry vegetables plunged 19 percent. Inversely, the index for eggs for fresh use jumped 28.9 percent and home heating oil and distillates surged 37.9 percent.
Inflation remains steady for the United States, suggesting little pressure for the Fed to increase interest rates, partially resulting from the strong dollar and the large drop in energy prices.
The Fed recently hinted, however, that economic weakness overseas could cause a Fed response to raise interest rates soon, despite strong U.S. inflation and jobs.
The producer price index measures prices at the wholesale level, and economists watch it because it helps predict prices that will within a few months affect the retail prices that consumers pay.
The Labor Department is set to release its consumer price index March 16.
