WASHINGTON (Reuters) – U.S. producer prices unexpectedly fell in February and the rise in prices in January was not as large as initially thought, offering some hopeful signs in the fight against inflation.
The producer price index for final demand slipped 0.1% last month, the Labor Department said on Wednesday. Data for January was revised down to show the PPI increasing 0.3% instead of 0.7% as previously reported.
In the 12 months through February, the PPI increased 4.6% after rising 5.7% in January. Economists polled by Reuters had forecast the PPI gaining 0.3% on the month and advancing 5.4% year-on-year.
The government reported on Tuesday that consumer prices rose strongly in February, though the annual increase was the smallest since September 2021.
The decline in the PPI was led by a 0.2% drop in goods prices, which followed a 1.2% increase in January. A 36.1% plunge in the cost of eggs accounted for more than 80% of the decrease in goods prices.
There were also decreases in the prices of residential natural gas, fresh and dry vegetables, diesel fuel, home heating oil, and primary basic organic chemicals. But prices for iron and steel scrap jumped 10.6%. Gasoline prices also rose.
Excluding the volatile food and energy components, goods prices gained 0.3% after climbing 0.6% in January.
Services prices fell 0.1% for a second straight month. There were decreases in margins for machinery and vehicle wholesaling, which fell 3.9%. Prices for wholesale chemicals and allied products, automobiles and parts retailing, guestroom rental, and airline passenger services also declined.
But the cost of outpatient care rose 0.5%. Securities brokerage, dealing, investment advice and related services as well as and loan services also increased.
Excluding food, energy and trade services components, producer prices rose 0.2% in February. The core PPI increased 0.5% in January. In the 12 months through February, the core PPI advanced 4.4%, matching January’s gain.