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May Producer Price Index ! Consensus: !
! Overall: -0.8% !
Key Numbers: May Apr ! Core: +0.2% !
PPI Index: -1.0% -0.2% ! Actual: !
Core Index: +0.2% +0.2% ! Overall: -1.0% !
Intermediate: -0.8% -0.5% ! Core: +0.2% !
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By Josh Mitchell and Eric Morath
WASHINGTON--U.S. wholesale prices fell by the most in nearly three
years, the latest sign that inflation pressures are easing heading
into the summer.
The producer price index, which measures how much manufacturers and
wholesalers pay for finished goods, fell 1.0% in May from a month
earlier, the Labor Department said Wednesday. The drop--due largely to
a 4.3% fall in energy costs--was the steepest since July 2009.
"Core" prices, which strip out volatile energy and food costs, rose
0.2% last month on higher pharmaceutical prices.
The report contained signs that prices would continue to fall as the
costs of goods earlier in the processing pipeline also fell
substantially.
Wholesale prices fell more sharply than economists' expectations,
which had overall prices falling by 0.8% and core prices rising 0.2%.
Wholesale prices are one measure of inflation, and frequently a
decline will lead to a drop in prices for consumers, which have
already seen prices fall. The easing of inflation pressures gives the
Federal Reserve more room to act, possibly through additional bond
purchases, to stimulate the economy if it determines to take such a
course. Fed officials are currently reviewing their options ahead of
their policy meeting scheduled for next week.
With the slide in energy prices, the annual rate of inflation at the
producer level fell to 0.7%, the lowest since October 2009. Still,
year over year, core prices were up 2.7%.
The drop in energy prices, month to month, was the biggest since March
2009, and was due largely to plunging gasoline prices. Liquefied
petroleum and natural gas prices also fell.
Food prices fell by 0.6%, due to lower prices for meats.
Prices for intermediate goods--which are semifinished goods like
lumber or flour that require further processing--declined by 0.8% in
May. Prices of raw materials, known as crude goods, fell by 3.2%. That
suggests that prices for finished goods will continue to fall in
coming months.
The Labor Department's producer price index report can be accessed at:
http://www.bls.gov/ppi
Write to Josh Mitchell at joshua.mitchell@dowjones.com and Eric
Morath at eric.morath@dowjones.com
(END) Dow Jones Newswires
June 13, 2012 08:45 ET (12:45 GMT)
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