US wholesale inflation fell unexpectedly in February on lower food costs
The producer price index dropped 0.1 per cent in February from a month ago, the Labor Department said, after a 0.3 per cent increase in January
People shop at a store in Rosemead, California, US. FILE/AFP.
Washington: US wholesale prices fell last month in welcome news for policymakers, according to government data released Wednesday, as costs for eggs, gas and diesel fuel slipped.
The producer price index (PPI) dropped 0.1 per cent in February from a month ago, the Labor Department said, after a 0.3 per cent increase in January.
US policymakers have been battling stubborn inflation, with the Federal Reserve raising interest rates rapidly over the past year to ease demand and rein in surging costs.
While there have been hopes that the central bank can soon cool its aggressive campaign, strong economic data in January, along with recent turmoil in the banking sector, have caused some concern.
But latest figures showing a pullback in consumer and wholesale price inflation should bring some relief.
The decline last month was led by goods prices, which edged down 0.2 per cent, while the index for services also crept lower, the Labor Department said.
“Over 80 percent of the February decline in the index for final demand goods can be attributed to a 36.1 per cent drop in prices for chicken eggs,” the department added in a statement.
Meanwhile, indexes for residential natural gas, fresh and dry vegetables, as well as diesel fuel, dropped as well.
On an annual basis, PPI was up 4.6 per cent in February.
“Producer prices are off their peaks but inflation is still elevated,” said Rubeela Farooqi, chief US economist at High Frequency Economics.
She added that while recent economic data support a further rate hike at the Fed’s meeting next week, officials will have to balance their decision with financial stability risks — after the quick collapse of Silicon Valley Bank and contagion fears.
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