food costs

U.S. wholesale inflation fell last month

Wholesale price increases in the United States slowed sharply last month as food and energy costs declined, a sign that inflationary pressures may be easing as the Federal Reserve considers whether to keep raising interest rates to fight higher prices.

From January to February, the government’s producer price index fell 0.1%, after a 0.3% rise from December to January.

Compared with a year ago, wholesale prices rose 4.6%, a big drop from the 5.7% annual increase in January.

A significant driver of last month’s wholesale inflation slowdown was a huge drop in the prices of eggs, which plummeted 36.1% just in February. Egg prices had previously surged after a widespread outbreak of avian flu.

Excluding volatile food and energy costs, so-called core wholesale prices were unchanged from January to February.

The core measure can provide a better read of longer-term inflation trends.

Compared with a year ago, core prices rose 4.4%, down from a 5% annual increase in January and a 5.8% rise in December.

Services prices at the wholesale level declined in February, slipping 0.1%. A substantial 1.1% drop in shipping costs lowered overall services prices.

Energy prices dropped 0.2%, with the costs of heating oil, natural gas and diesel fuel all declining.

Food prices sank 2.2% from January to February, a third straight monthly decline and the sharpest since June 2020.

That drop suggests that grocery store prices, which have been growing at a slower pace, could ease further in coming months.

The producer price data reflects prices charged by manufacturers, farmers and wholesalers, and it flows into an inflation gauge that the Federal Reserve closely tracks. It can provide an early sign of how fast consumer inflation will rise.

The drop in shipping costs could help people like Stephanie Herbig, owner of the Cheeky Bird women’s boutique in Kansas City.

High inflation forced Herbig to reduce the number of items she imports from overseas because “the cost of that is a lot higher.” She is becoming choosier, she said, about which products she stocks.

— The Associated Press