Producer prices dip 0.1 percent in February

WASHINGTON — The prices companies receive for their goods and services fell slightly in February, the latest sign that inflation is tame.

The producer price index, which measures price changes before they reach the consumer, dropped 0.1 percent in February, the Labor Department said Friday. That’s the first decline since November. A sharp fall in the price markups by wholesalers and retailers pushed down the index.

Wholesale food and energy prices increased, as did the cost of pharmaceuticals. Excluding the volatile categories of food, energy and retailer and wholesaler profit margins, core prices ticked up 0.1 percent.

The figures underscore that inflation remains largely in check. Businesses have struggled to raise prices because of historically high levels of unemployment and meager wage growth. That’s made it harder for consumers to pay more. And with unemployment high, those with jobs are less able to demand higher pay.

The data also reflects the impact of aggressive discounting by clothing and shoe stores. Their profit margins fell 9.3 percent, the steepest on record. Gas stations and grocery stores also reduced their markups.

Low inflation has enabled the Federal Reserve to pursue extraordinary stimulus programs to try to boost economic growth. It has kept the short-term interest rate it controls at nearly zero for more than five years. It has also been purchasing bonds in an attempt to lower long-term interest rates to encourage more borrowing and spending.

The Fed is now trying to unwind some of that stimulus. It has cut its monthly bond purchases to $65 billion, from $75 billion in January and $85 billion last year.

Fed policymakers will meet next week and are expected to announce another $10 billion cut. Employers stepped up hiring last month, after harsh winter weather cut into job gains in December and January. Consumers also spent more at retailers in February after sharp drops in the previous two months.

The figures suggest the economy may be picking up as the weather improves. That may encourage the Fed to continue scaling back its stimulus. Still, Fed policymakers have expressed concern about the persistence of low inflation. If it remains below target, the Fed could extend its stimulus efforts.

More in Herald Business Journal

Snohomish County’s campaign to land the 797 takes off

Executive Dave Somers announced the formation of a task force to urge Boeing to build the plane here.

A decade after the recession, pain and fear linger

No matter how good things are now, it’s impossible to forget how the collapse affected people.

Panel: Motorcycle industry in deep trouble and needs help

They have failed to increase sales by making new riders out of women, minorities and millennials.

Costco rises as results display big-box retailer’s resiliency

Their model has worked in the face of heightened competition from online, brick-and-mortar peers.

For modern women, 98-year-old rejection letters still sting

In a stark new video, female Boeing engineers break the silence about past inopportunity.

Tax reform needs the public’s input on spending priorities

The GOP tax plan is a good idea, but the next step should give us a voice on how taxes are spent.

Commentary: GM, Boeing fight a war of words over Mars

Boeing is strongly signaling how crucial deep-space exploration is to its future.

Under cloud of ethics probes, Airbus CEO Enders to step down

He leaves in 2019 after 14 years. Meanwhile, aircraft division CEO Fabrice Bregier leaves in February.

$4.99 sandwich promotion irks some Subway business owners

Management insists that “most franchisees support the promotion.”

Most Read