The producer prices in the United States dropped during February, which reinforced the view that minimal pressure of inflation could keep the U.S. Federal Reserve from increasing interest rates for a long time.
The Department of Labor said Friday its producer price index that is seasonably adjusted for final demand fell by 0.1% in February.
The new data gives very little reason for officials from the Fed to worry that easing money policies are increasing inflation and could make them feel more comfortable maintaining interest rates close to zero for a number of months more.
Inflation in the U.S. had been holding at low level over recent years due to a high rate of unemployment that has remained persistent.
The U.S. dollar dipped against the Japanese yen after the publication of the data suggesting investors believed the report increased the view that the Fed would maintain its interest rates very low into 2015.
Prices for government debt in the U.S. and the stock index futures did not change following the report’s publication.
Analysts forecasted an increase in prices last month by businesses like retailers, wholesalers and factories. The price index rose by 0.2% during January.
The index, which has been renamed, was expanded recently to include construction and services. It previously was referred to as the PPI for finished goods.
The PPI now includes close to 72% of services as well as other factors, which will likely see it tracking near to the Consumer Price Index over a period of time, according to many economists.
Final demand rose for goods by 0.4% during February, while final demand for services fell by 0.3%. The Department of Labor said close to 80% of the fall in the services index came about because of lower margins for U.S. retailers of footwear, apparel and accessories.
In the past 12 months through the end of February, there has been an increase of 0.9% in producer prices, the smallest gain over one year since May of 2013.