US Sept PPI down 1.3 pct vs 0.7 pct fall expected, core rate up 0.6 pct
US inflation at the wholesale level fell by its sharpest amount in more than three years in September, but prices outside of energy and food rose by the largest amount in almost two years, the Labor Department said Tuesday. The department's Producer Price Index, which measures inflation pressures before they reach the consumer, fell 1.3 pct last month, sharper than the 0.7 pct decline analysts had expected. That's the largest drop since April 2003. The headline PPI rose rose just 0.1 pct in each of the prior two months. The so-called core-rate of wholesale inflation, which excludes volatile food and energy prices, rose by a sharper-than-expected 0.6 pct in September after falling 0.4 pct in August and 0.3 pct in July. The core PPI has never fallen for three consecutive months. The 0.6 pct increase in the core rate matches rises in January 2005 and March 2003 and was exceeded in December 1998. Economists had expected the core rate to rise 0.2 pct in September. Core prices have risen 1.2 pct in the past twelve months. Light truck prices rose 3.5 pct, the sharpest rise since October 1985. Car prices rose 2.8 pct, the sharpest rise since September 1990. Producer prices have risen 0.9 pct over the past year, compared with a 3.7 pct year-over-year gain in August. That's the lowest annual gain since October 2002. Energy prices fell 8.4 pct in the month, led by plummeting gasoline prices, which fell 22.2 pct. Home heating oil prices fell 18.5 pct, while residential natural gas prices rose 1.8 pct in September. Intermediate goods, which are partially processed materials, fell 1.4 pct in the month, the sharpest decline since April 2003. Crude goods fell 3.4 pct in September, the sharpest drop since February. Crude energy materials fell 8.4 pct in the month, also the sharpest drop since February. Prices for basic industrial materials, including iron and steel scrap, rose 1.0 pct in the month.
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