US Producer Prices Fall Due to Lower Service Costs

U.S. producer prices fell in February, dragged down by falling costs for services and offering little sign of a pickup in inflation pressures.

The Labor Department said on Friday its seasonally adjusted producer price index for final demand dropped 0.1 percent last month.

U.S. inflation has held at a very low level in recent years because of a persistently high unemployment rate. This is expected to push the Federal Reserve to keep its benchmark interest rate near zero for many more months even as the central bank dials back its monetary stimulus.

Prices received by the nation’s factories, retailers and wholesalers had risen 0.2 percent in January.

The renamed index was recently expanded to include services and construction. It was previously known as PPI for finished goods.

PPI now covers about 72 percent of services, which along with other factors will see it likely tracking closely the Consumer Price Index with the passage of time, according to economists.

via Reuters

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