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 The Labor Department said on Friday its seasonally adjusted producer
price index slipped 0.1 percent as gasoline prices maintained their
downward trend. Prices received by the nation's farms, factories and
refineries fell 0.2 percent in October.
It was the first time since October of last year that producer
prices had fallen for three consecutive months and analysts had
expected prices would be flat in November.
"There is no inflation coming up the pipe into what producers are
receiving for their goods, which means they are not going to be
passing anything on to consumers," said Omair Sharif, an economist
at RBS in Stamford, Connecticut.
In the 12 months through November, producer prices gained 0.7
percent after rising 0.3 percent in October.
Wholesale prices stripping out volatile food and energy costs nudged
up just 0.1 percent last month after rising 0.2 percent in October.
The 12-month gain slipped to 1.3 percent from 1.4 percent in
October.
U.S. Treasuries prices rose marginally as the data suggested
inflation would remain below the Fed's 2 percent target for some
time to come, eroding the case for withdrawing stimulus soon. Some
analysts think the Fed could ease back on support as early as the
next meeting on December 17-18, although most tip early 2014.
Stocks on Wall Street were up modestly, while the dollar was little
changed against a basket of currencies.
Despite signs of the economy is strengthening, there is little to
indicate price pressures will pick up soon, given the
still-considerable slack in the labor market.
FOCUS ON FED
Some Fed officials have raised concerns about inflation being too
low, as they mull the future of their $85 billion a month
bond-buying program. A core inflation gauge closely followed by the
central bank was up just 1.1 percent in October.
"There are some who worry that subpar economic growth may be
contributing to worrisome deflationary pressures," said Chris Rupkey,
chief financial economist at Bank of Tokyo-Mitsubishi in New York.
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"Inflation persistently below (the Fed's) 2 percent objective could
pose risks to economic performance. That means they might not stop
trying to boost the economy through their low rates and quantitative
easing policies."
Consumer inflation data next week is expected to show prices barely
rising in November, according to a Reuters survey, and domestic
inflation is expected to remain subdued through next year, even as
growth accelerates.
"The global economy and the energy revolution are restraining most
prices and it is hard to see why that would change anytime soon,"
said Joel Naroff, chief economist at Naroff Economic Advisors in
Holland, Pennsylvania.
Last month, wholesale gasoline prices fell 0.7 percent, accounting
for nearly three-quarters of the decrease in the energy index and
building on a 3.8 percent decline in October.
Wholesale food prices were flat, with higher prices for pork offset
by a record fall in bakery goods and the biggest drop in the prices
for young chickens in nearly three years.
Passenger car prices fell 0.8 percent after increasing 1.7 percent
in October as new vehicle models were introduced. Light truck prices
increased 0.6 percent.
(Reporting by Lucia Mutikani; editing by
Krista Hughes)
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