Wholesale Prices Off 0.1% in February

Wholesale prices fell 0.1% in February as a jump in fruit and vegetable costs was not enough to derail the continuing good news on inflation, the Labor Department said Friday.

The decline, the first since an identical drop in October, was attributed to the largest fall in energy prices in almost two years and to lower prices for meat, fish and poultry.

For the first two months of the year, the Producer Price Index was rising at a modest annual rate of 0.8%. Analysts are predicting that inflation will stay at moderate levels for the rest of the year.

In a separate report, the Federal Reserve Board said the country’s industrial production fell a sharp 0.5% in February, only the third time during this recovery that output at the country’s factories, mines and utilities has gone down.

Severe Winter Weather

While the slowdown was widespread among various industries, analysts said production was held back by severe winter weather, and they predicted that coming months will show further improvements.

At the White House, presidential spokesman Larry Speakes noted that wholesale prices had risen just 0.7% over the last 12 months, which he called “a remarkable achievement as far as holding down inflation. Producer price inflation remains at rock bottom.”

Many analysts had been predicting that wholesale prices would jump significantly in February after a devastating freeze of citrus and vegetable crops in Florida.

But the 9.1% increase in fresh fruit prices and a 4.6% jump in vegetable prices were offset by declines in the price of beef, down 1.4%; pork, off 5.4%; poultry, down 3.5%, and fish, down 4.2%.