Tags: Producer | Prices | energy | ppi

Producer Prices Fall Sharply as Energy Prices Tumble

Thursday, 13 Dec 2012 08:35 AM

 

Share:
  Comment  |
   Contact Us  |
  Print  
|  A   A  
  Copy Shortlink
Cheaper gas drove down a measure of wholesale prices in November for the second straight month, a sign inflation remains in check.

The producer price index fell 0.8 percent last month, the steepest drop since May, the Labor Department said Thursday. That follows a 0.2 percent decline in October. The index measures the cost of goods before they reach the consumer.

Gas prices fell last month by the most in more than three years. Food prices, however, rose by the most in nearly two years, pushed higher by costlier beef and vegetables.

In the past year, wholesale prices have increased 1.5 percent. That's the lowest annual pace in four months.

Excluding volatile food and gas, core producer prices ticked up 0.1 percent in November and 2.2 percent in the past year.

Gas prices had risen sharply over the summer, pushing up both the producer and consumer price indexes. But since then, the cost of gasoline, home heating oil and natural gas has fallen back.

Nationwide, a cost of a gallon of gasoline fell to $3.32 Wednesday, according to AAA, down 13 cents in the past month and nearly 50 cents since mid-October.

Low inflation means consumers have more money to spend, which helps the economy. It also gives the Federal Reserve more room to keep interest rates low in an effort to spur economic growth. If prices were to begin rising rapidly, the central bank might be forced to raise rates in response.

The Fed said Wednesday that it now plans to keep the short-term interest rate it controls at nearly zero until the unemployment rate falls to at least 6.5 percent and inflation isn't expected to top 2.5 percent in the next two years.

In a statement, Fed policymakers said that they expect "inflation over the medium term will likely run at or below its 2 percent objective."

© Copyright 2014 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

Share:
  Comment  |
   Contact Us  |
  Print  
  Copy Shortlink
Around the Web

Join the Newsmax Community
Please review Community Guidelines before posting a comment.
>> Register to share your comments with the community.
>> Login if you are already a member.
blog comments powered by Disqus
 
Email:
Country
Zip Code:
Privacy: We never share your email.
 

You May Also Like
Around the Web

Most Commented

Newsmax, Moneynews, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, NewsmaxWorld, NewsmaxHealth, are trademarks of Newsmax Media, Inc.

MONEYNEWS.COM
© Newsmax Media, Inc.
All Rights Reserved