WASHINGTON - The producer price index for finished goods unexpectedly fell in September dropping 0.6% as energy prices slumped, the Labor Department reported today.
Core prices decreased 0.1% for the month, the third core price decline this year.
Energy prices, which jumped 8.0% in August, fell 2.4% in September. About 80% of that decline was attributed to gasoline prices, which fell 5.4%.
Economists polled by Thomson Reuters expected no change in total producer prices and for core prices to inch up by 0.1%, according to the median estimate.
Wholesale prices fell 4.8% for the year ending in September as core prices increased 1.8% in that period. Producer prices rose 1.7% on a monthly basis in August as core prices increased 0.2%. Core prices in September were dragged down by a 1.4% decrease in light motor truck prices, the largest decline in the category since June 2008.
The producer price index follows Labor’s release of the consumer price index last week. CPI rose 0.2% in September and import prices rose 0.1%.
The Federal Reserve said last week that its staff forecasts consumer core inflation "to slow further over the next two years from the pace of the first half of 2009," according the Federal Open Market Committee's September meeting minutes released on Oct. 14. Overall consumer price inflation is expected to be above core inflation in 2009 and 2010 because of higher energy prices, the Fed minutes said.
