WASHINGTON – A sharp drop in the cost of gasoline and food pushed down overall U.S. producer prices in April.
The Labor Department said Thursday that its producer price index fell 0.4 percent last month after rising 0.2 percent in March. But even excluding volatile food and energy categories, the core index slipped 0.2 percent last month, brought down in part by lower shipping costs.
The index measures prices of goods and services before they reach consumers.
Over the past year, wholesale prices have dropped 1.3 percent, the most since Labor revamped the index in late 2010.
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Wholesale energy prices dropped 2.9 percent from March, pulled lower by a 4.7 percent drop in gasoline prices. Food prices slid 0.9 percent last month; wholesale egg prices plunged 25.3 percent, most since June 2007.
Core producer prices were also brought down last month by a sharp drop in markups charged by gasoline wholesalers and retailers. Wholesalers of machinery also reported lower margins, likely reflecting a sharp rise in the dollar, which makes U.S. goods less competitive in overseas markets, noted Ian Shepherdson, chief economist at Pantheon Macroeconomics.
Federal Reserve officials are monitoring measures of inflation as they weigh whether to raise the short-term interest rate they control. They have kept it near zero for more than six years. Fed officials say they want to be “reasonably confident” that inflation is headed toward their 2 percent target, which would signal a stronger economy.
Many economists predict the Fed won’t raise short-term rates any sooner than September.