US April wholesale prices fall 0.7% on sharp 6% gasoline decline

15 May 2013 15:07  [Source: ICIS news]

WASHINGTON (ICIS)--US wholesale prices for finished goods fell by 0.7% in April from March, the Labor Department said on Wednesday, with the decline attributed almost entirely to a sharp 6% drop in producer prices for gasoline.

In its monthly report, the department said that more than 80% of the April decline in the producer price index (PPI) could be traced to a 2.5% drop in producer prices for finished energy goods.

Within that energy sector, the 6% drop in producer prices (also known as wholesale prices) for gasoline represented 90% of the downturn, but lower prices for home heating oil and residential electric power also contributed to the decline.

In addition to the drop in wholesale costs for energy products, the department said that producer prices for food products saw a 0.8% decline last month.

With both energy products and foods backed out of the overall total, the so-called core index for producer prices saw a narrow 0.1% gain in April.

The PPI is closely watched by economists because any significant gains in wholesale prices could signal a subsequent increase in prices at the retail level and raise inflationary pressures.

The Federal Reserve Board, the US central bank, is ever watchful for any hint of runaway inflation and would likely move to ratchet up interest rates to forestall an inflation run.

However, the Labor Department noted that April’s 0.7% decline in the PPI followed a 0.6% drop in March, suggesting there is little risk of major price movement at the retail level in the near term.

Although the PPI did jump by 0.7% in February, that gain was not typical of recent months. Since October last year, the PPI has largely been flat or in negative territory.

Paul Hodges studies key influences shaping the chemical industry in Chemicals and the Economy


By: Joe Kamalick
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