By ,
Published January 13, 2015
Producer prices plunged a sharper-than-expected 0.6 percent last month, the biggest drop in over two years, as energy prices plummeted and food prices edged down.
But even outside those two volatile areas prices were unexpectedly well-contained, a government report showed on Tuesday. Stripping out volatile food and energy prices, the Labor Department's (search) producer price index (search), a gauge of prices received by farms, factories and refineries, advanced a mild 0.1 percent.
The report was likely to further beat back inflation concerns in financial markets. Wall Street economists had expected overall producer prices to slip just 0.2 percent, with core prices moving up by 0.2 percent.
The department said energy prices (search) plummeted 3.5 percent, the biggest drop since April 2003. Gasoline prices dropped 9.9 percent, heating oil costs fell 7.8 percent and the cost of liquefied petroleum gas was off 9.8 percent.
Producer prices have followed an uneven upward path as energy costs trace the sharp up-and-down movements in the cost of crude oil. Over the past 12 months, energy prices have risen 10.2 percent, a driving force behind the 3.5 percent rise in producer prices.
Crude oil prices, which hit a record high above $58 a barrel in early April, closed as low as $46.80 a barrel last month. But they have since moved back up above $55, suggesting some of May's producer-price relief could prove short-lived.
A 0.3 percent drop in food prices, the first decline since January, contributed to the overall drop in producer prices, which was the biggest decline since April 2003.
The mild increase in core producer prices, which left the year-over-year increase steady at 2.6 percent, reflected a 0.2 percent decrease in car prices, a 0.9 percent decline in the cost of light trucks and SUVs and a 4.8 percent drop in computer prices.
Those declines, however, were offset by rising prices elsewhere. Cigarette prices moved up 0.8 percent, prices for industrial machinery rose 2.2 percent and the cost of pharmaceutical drugs gained 0.4 percent.
https://www.foxnews.com/story/core-producer-prices-unexpectedly-tame