US Producer Prices Fell 0.4% in October

13 Nov 2015 | Author: | No comments yet »

US Producer Prices Drop in Latest Sign of Tame Inflation.

WASHINGTON — The prices charged by farmers, manufacturers and other producers fell in October for the second straight month, fresh evidence that there is little sign of inflation in the U.S. economy. Federal Reserve policy makers are looking for signs that a stronger economy and tighter labor market will help move inflation closer to their 2 percent target that hasn’t been met since April 2012. “We’re seeing deflationary pressures at the producer level,” said Laura Rosner, a U.S. economist at BNP Paribas in New York, who forecast a decline in wholesale prices. “It is a fragile environment to be raising rates. It confirms why the Fed is likely to move very slowly because the inflation outlook remains uncertain and fragile.” Food prices dropped 0.8 percent for a second month, led by the biggest decline in the cost of eggs since March 2000.

Weak price gains pose a challenge for the Federal Reserve, which targets a 2 percent inflation rate as a cushion against falling prices, or deflation. Fed officials are widely expected to raise the short-term interest rate they control for the first time in nine years at their next meeting in December. Producer costs after eliminating trade services along with food and fuel declined 0.1 percent in October following a 0.3 percent drop a month earlier.

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