US Producer Prices Unexpectedly Fall, Signaling Easing Pressures

US producer prices unexpectedly declined in February, pointing to an easing of cost pressures in corners of an economy still battling the highest inflation in a generation. The producer price index for final demand fell 0.1% from the prior month and increased 4.6% from a year earlier, according to data out Wednesday from the Bureau of Labor Statistics. Excluding the volatile food and energy components, the so-called core PPI was unchanged from a month earlier.

The median estimates in a Bloomberg survey of economists called for the overall PPI to increase 0.3% from a month earlier and for the core gauge to rise 0.4%.The decline in the PPI reflected decreases in both goods and services. That said, more than 80% of the retreat in merchandise can be attributed to a drop in the cost of eggs, the agency said. Services prices were restrained by machinery and vehicle wholesaling.

The data come just a day after the closely watched consumer price index showed broad-based and persistent inflation, buoyed by a strong labor market. The PPI, which is a measure of wholesale prices, has slowed significantly on a year-over-year basis amid improving supply chains and declines in many commodities.

When paired with Tuesday’s CPI and turmoil in the banking sector, the data present a tricky picture for Federal Reserve officials as they deliberate whether to extend interest-rate increases at next week’s meeting.