sharpest decline since a similar 0.6% drop in
January 2015.
Core inflation, which excludes energy and food,
was also down in February, dropping 0.3%.
Over the past year, producer prices have risen a
modest 1.3% and core prices are up just 1.4%.
On Wednesday, the government had reported
that consumer prices edged up a slightly 0.1%
and are up 2.3% over the past year.
The Federal Reserve seeks to manage monetary
policy to hit its target of 2% annual increases
in inflation.
The central bank last week slashed its policy
interest rate by one-half percentage point, the
biggest cut since the 2008 financial crisis. Many
economists are looking for another half-point
cut when the Fed meets next week, expecting
the central bank to provide more protection for
the U.S. economy against the adverse effects of
the spreading coronavirus.
A major reason the Fed has the leeway to cut
interest rates is that inflation has remained
a no-show throughout this recovery even as
unemployment fell to half-century lows.
For February, energy prices dropped 3.6%,
the biggest drop since December 2018, with
gasoline prices down 6.5%. Analysts believe
there will be further declines in energy prices
because of reduced travel from fears about the
coronavirus and a production dispute between
Saudi Arabia and Russia.
Food prices at the wholesale level dropped 1.6%
in February, the biggest decline since a 1.7%
drop in February 2015.