By Brittany Magee
The prices that U.S. producers receive for their goods and services decreased in September for the first time in a year due to a sharp decline in the price of fuel.
The producer price index for final demand decreased a seasonally adjusted 0.1 percent last month from August, the U.S. Bureau of Labor Statistics reported Wednesday. Economists expected the inflation gauge to increase 0.1 percent after an unchanged reading in August.
Excluding the volatile categories of food and energy, producer prices rose 0.2 percent.
The producer index “tends to front-run broader measures of consumer inflation,” noted Diane Swonk, chief economist at Mesirow Financial, in a blog post.
For the year, producer prices rose 1.6 percent in September, the slowest rate since March and well below the Federal Reserves 2 percent goal for inflation.
Prices for goods dropped for the second consecutive month at 0.2 percent. Food and energy prices both fell 0.7 percent in September, including a 2.6 percent decline in gasoline prices. Service prices also decreased 0.1 percent.
Inflation remains sluggish in the U.S. and other industrialized economies. With oil prices plunging to a four-year low this week, and growth in China and Europe slowing, U.S. inflation appears unlikely to go up in the near future.
“Inflation is still in a long-term rising trend, but that process is going to be gradual,” said Brian Wesbury, the chief economist for First Trust.
The Federal Reserve’s Beige Book released Wednesday, a summary of economic activity in all 12 Fed districts, showed “modest to moderate economic growth” with little sign of inflation.
The consumer price index, which measures retail inflation, decreased 0.2 percent in August, marking the first time the index for items less food and energy hasn’t increased since 2010.
The U.S. Labor Department is set to release its consumer price index Oct. 22.