The Department of Labor
said on Friday its seasonally adjusted producer price index (PPI) for final
demand dropped 0.1 percent in February. U.S.
producer prices fell, dragged down by falling costs for services and offering
little sign of a pickup in inflation pressures.
U.S.
inflation has held at a very low level in recent years because of a
persistently high unemployment rate. This is expected to push the Federal
Reserve to keep its benchmark interest rate near zero for many more months even
as the central bank dials back its monetary stimulus.
Final demand for
goods rose 0.4 percent in February. Final demand for services dropped 0.3
percent. The Labor Department said about 80 percent of the decline in its
services index was due to lower margins for retailers of apparel, footwear and
accessories.
In the 12 months
through February, producer prices increased 0.9 percent, the smallest 1-year
gain since May 2013.
Producer prices
excluding volatile food and energy costs fell 0.2 percent. Another gauge of
core producer prices - final demand less foods, energy, and trade services -
nudged up 0.1 percent.
Accounting for about
two-thirds of final demand, economists believe that, over time, this could
become the preferred core rate measure for producer prices.
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