U.S. producer prices fell in February, according to the Labor Department. It’s the fourth month in a row with a decline of the Labor Department produce price index.
Also, other data released Friday showed that consumer sentiment also declined in early march, after the harsh winter burdened households with with high utility bills and disrupted business activity and shopping.
The Labor Department added its producer price index declined 0.5 percent. Profit margins in the services sector, especially for gasoline stations, were diminished, while warehousing and transportation costs fell. The PPI fell by 0.8 percent in January.
Economists expected that the profit price index would rise in February.
A separate report, compiled by the University of Michigan, stated its consumer sentiment index fell by several points, to 91.2 in early March from a 95.4 level in February. A recovery is expected in this rating next month.
According to the U.S. Treasury, the dollar rose against an important group of currencies, while U.S. stocks fell, the the S&P 500 index entering its third straight weekly of decline.
The inflation data precedes the Fed meeting scheduled for next week, where regulators are expected to signal the U.S. central bank’s acceptance to a June rate raise. With price pressures remaining subdued and retail sales continuing their decline in February, most economists think the central bank could postpone raising rates until September, at least. Inflation is below the Fed’s 2 percent target.
The Fed has maintained its short-term interest rate near zero since December 2008.
The decline of the producer prices index was mainly recorded in the services sector last month. The trade services component, which reveals profit margins, fell 1.5 percent in February, after a 0.5 percent growth in January.
Margins for gasoline service station fell by 13.4 percent, a consequence of the drop in prices at the pump. Profit margins also fell for food, alcohol, jewelry and footwear retailers, Transportation and warehousing services also fell by 1,5 percent, while energy prices were unchanged in February.
Intense hiring in the past 12 months and lower gas prices raised consumer confidence in the past two months to its highest levels since the recession. The government announced that retail sales fell for a third month in a row in February as heavy winter weather discouraged shopping.
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