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PPI posts another drop
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March 13, 1998: 9:30 a.m. ET
Overall producer prices eased 0.1 percent in February, beating estimate
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NEW YORK (CNNfn) - In a sign of continuing low inflation, U.S. wholesale prices dipped for the fourth-straight month in February, driven down by sagging energy prices, the government said Friday.
In numbers that mirrored the economy's feel-good mood, the Labor Department's Producer Price Index eased 0.1 percent last month after an unexpectedly sharp 0.7 percent drop in January, the steepest decline in four years.
The core producer price index, which excludes volatile food and energy prices, inched upward 0.1 percent, reversing a decline of the same degree in January.
The producer price readings were slightly ahead of expectations. U.S. economists had forecast a 0.2 percent slide in the overall PPI and no change for the core reading excluding food and energy prices.
Friday's figures triggered a modest rally in bonds, which had been off slightly earlier in the day. The 30-year benchmark Treasury bond rose 11/32 to yield 5.88 percent.
The producer price index, released monthly by the U.S. Bureau of Labor Statistics, measures changes in wholesale prices. Prices of goods are calculated as they move through the manufacturing and distribution stage, before they reach store shelves.
Business inventories - the value of a firm's raw materials used as a measure of future economic activity - were unchanged from January.
"This is still very flat inflation," said Maureen Allyn, the chief economist at Scudder Kemper Investments. "We do not have an inflationary worry."
In February, energy goods slackened 1.8 percent, just under half the 3.8 percent decline in January. Gas and heating oil prices both fell last month, pushed down by weakened demand brought about by warmer weather across much of the Northeast and Midwest. In some regions, gas fell below the psychologically significant dollar-a-gallon benchmark.
Food prices, however, nudged 0.4 percent higher as passenger car prices dropped 0.3 percent, tobacco prices rose 1.8 percent and electronic computers plunged 6.6 percent.
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