Gas and Energy Prices Drag Down February Producer Price Index

The Producer Price Index (PPI) for final demand, or the prices U.S. businesses receive for their goods and services, decreased in February from the prior month, mostly due to lower energy prices.

The PPI dropped 0.2%, while the index for final demand goods fell 0.6% in February, marking the third straight month of decline, the Labor Department’s Bureau of Labor Statistics reported today.

Final demand energy dropped 3.4%; gasoline, 15.1%; and the index for final demand foods, 0.3%, while prices for goods less foods and energy advanced 0.1%.

Also on the uptick were prices for pharmaceutical preparations (1.2%) as well as prices for home heating oil and fresh eggs. Final demand services stayed flat in February after three consecutive increases. Retailing led in the indexed services that declined–down 6%–while financial services gained nearly 5%.

In other economic news, the Commerce Department said that seasonally adjusted manufacturers’ and trade inventories were up 1.8% in January 2016, year-on-year, and increased 0.1% from December. Meanwhile, trade sales and manufacturers’ shipments for January were down 1.1%, compared with January 2015, and 0.4%, from December 2015.

- Nicholas Stern, NACM editorial associate

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