Data serve to underscore precarious state of economy
By Ruth Mantell, MarketWatch
WASHINGTON (MarketWatch) -- U.S. producer prices fell 0.4% in September -- the second consecutive monthly decline -- as energy dropped but food rose, the Labor Department reported Wednesday.
Excluding food and energy, core producer prices rose 0.4% last month. Analysts polled by MarketWatch had been looking for a decrease of 0.6% in overall PPI as well as a 0.2% increase in the core rate.
Against a backdrop of deepening economic woes, the government's report tracking inflationary pressures at the wholesale level actually provides some breathing room on the inflation front.
Further back in the production pipeline, overall prices declined 1.2% for intermediate goods and plunged 7.9% for crude goods. Prices changes for raw materials don't translate directly into retail prices.
Joel Naroff, chief economist at Naroff Economic Advisors Inc., said it's likely that price pressures will "start easing going forward as the full extent of the slowdown hits home."
PPI details
Producer prices are up at an 8.7% pace over the past 12 months. In August, overall producer prices fell 0.9%, while the core PPI gained 0.2%.
Excluding food and energy, finished goods prices rose 4% over the past 12 months -- the largest change since 1991.
Also for finished goods, residential natural-gas prices fell a record 8.2% in September, compared with a prior record drop of 7.5% in October 2006.
Prices for crude core goods fell a record 9.4% last month, compared with the previous record drop of 7.7% in 1974.
Also on the data front Wednesday, the government reported that U.S. retail sales fell a wider-than-anticipated 1.2% for September, the worst drop in three years and the third decline in a row -- not to mention a further sign that the economy has sunk toward recession. See full story.
