Decline in Wholesale Prices Continues

Decline in Wholesale Prices Continues

The decline in the food prices had made up for an increase in the gasoline prices, due to which the wholesale prices went down for a fourth straight month in February.

On Friday, the Labor Department said that its producer price index, which measures inflation pressures before they reach consumers, has shown a fall of 0.5% in February following a 0.8% fall in January, which had been a record decline in a government series that goes back to 2009.

During the month, core producer prices, leaving volatile food and energy costs aside, have also dropped by 0.5%. In the last 12 months, producer prices have shed 0.6% whereas the core prices have climbed a modest 1%.

Since previous year, inflation has declined even further below the Federal Reserve's goal of seeing prices rise about 2 percent annually.

Robert Brusca, president of Fact and Opinion Economics in New York, said, "Inflation is very much controlled in this environment, and we have a rising dollar that's going to put downward pressure."

Brusca added that Fed is strongly in the favor of getting inflation up into its target zone so that it can be more comfortable with where policy is, but it hasn't happened yet.

In February, food costs were 1.6% down, and the energy costs overall were flat because declines in natural gas and electric power combined with a gain in gasoline, which rose 1.5%.

According to AAA, gasoline prices have been falling since the mid of previous year and has hit a six-year low in January of $2.03 a gallon, but the prices of gas has gone up since then, with the nationwide average for a gallon of regular grade now at $2.45, up from $2.23 a month ago.