29 October 2013 16:37 [Source: ICIS news]
WASHINGTON (ICIS)--US wholesale prices fell by 0.1% in September from August, the Department of Labor (DOL) said on Tuesday, led by an unusual 1% drop in foods that more than offset a 0.5% gain in energy products.
In its monthly report, the department said that the seasonally adjusted 0.1% decline in its September producer price index (PPI) followed a 0.3% gain in August. There was no change in the July PPI from June.
The 1% drop in producer prices - also known as wholesale prices - for finished food products was the sharpest decline since the 1% decline seen in April this year. The downturn in wholesale foods prices was driven chiefly by a nearly 18% drop in producer prices for vegetables.
After nearly a year of generally declining wholesale prices for energy goods, September saw a 0.5% gain, following the 0.8% advance in August.
Much of the advance in energy products last month was attributed to home heating fuels that have seen increased demand as colder Canadian weather has begun to push south into the US.
The so-called core index for producer prices - with food and energy products backed out of the overall total - rose by a narrow 0.1% in September from August, the department’s report said.
Part of that slim gain in the core index was a 0.5% increase in wholesale prices for plastic resins and related materials. That September increase followed a 0.3% price bump for resins in August.
In contrast, producer prices for basic organic chemicals fell by 0.3% in September from August, the department said, a downturn that essentially offset the 0.3% gain seen in August.
Economists watch wholesale prices for early warnings of inflation gains at the retail level.
Any hint of sharp increases in consumer-level inflation could trigger restraining action by the Federal Reserve Board in the form of increased interest rates.
Paul Hodges studies key influences shaping the chemical industry in Chemicals and the Economy
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