Producer prices declined 0.1% in February, dropping for the second time in the past three months and contracting from the 0.3% increase seen in January, according to the U.S. Department of Labor.
What’s going on: The decrease comes on the heels of January’s rise in prices for final demand goods and services.
- The index for final demand goods fell 0.2% in February after a 1.2% increase in January.
- Excluding food and energy, producer prices for final demand goods increased 0.3% in February, down from January’s 0.6% gain.
- Producer prices for final demand services declined 0.1% in February, the same reading as January’s.
- Over the past 12 months producer prices for final demand goods and services have risen 4.6%.
Core producer prices: February’s core price index—which excludes food, energy and supplier margins—inched up 0.2% from January.
Food and energy: Most of the February decrease in final demand goods can be attributed to a 36.1% drop in prices for chicken eggs.
- Also on the decline in February were the indexes for home heating oil, diesel fuel, residential natural gas, fresh and dry vegetables and primary basic organic chemicals.
The final say: “Overall, these data continue to show moderation in wholesale inflation, particularly in the year-over-year data, which is encouraging,” said NAM Chief Economist Chad Moutray.
- “Yet the data also show that input costs continue to rise steadily and at paces that are higher than preferred. As a result, the Federal Reserve will likely continue its path toward higher interest rates for the next few meetings.”