US wholesale inflation drops as producer prices decline 0.6% in September

Sharply lower energy costs helped pull US wholesale inflation down as producer prices declined 0.6% in September and 4.8% on a year-over-year basis, the government reported Tuesday.

The latest Labor Department’s Producer Price Index number, which measures prices at the factory door and inflation pressures before they reach the consumer, follows 1.7% increase in August.

"Inflation is not an immediate concern," Ryan Sweet, an economist at Moody’s Economy.com in West Chester, Pennsylvania, was quoted on Bloomberg. "We’re probably going to see core inflation continue to soften over the next couple of months" and "this will likely keep the Fed on the sidelines for the foreseeable future."

Both food and energy prices at the wholesale level dropped in September, falling 0.1% and 2.4%, respectively. Gasoline prices fell 5.4% to account for nearly 80% of the overall decline. Heating oil plunged 9.8%.

The core wholesale inflation rate for September, which excludes volatile energy and food costs, retreated 0.1%. However, core producer prices climbed 1.8% higher than a year earlier, but that is the smallest year-over-year gain since July 2007.

In related news, last Thursday the government released the Consumer Price Index for September, which showed prices rose 0.2% last month. (See US Consumer Prices Edge Higher in September, Annual Inflation Down 1.3%.) The CPI measures inflation pressures at the consumer level.

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