U.S. wholesale prices drop 0.6% in September

08:17, October 21, 2009      

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The U.S. wholesale prices declined 0.6 percent in September, a drop that outpaced economists' expectations, the U.S. Department of Labor reported Tuesday.

The drop in last month's wholesale prices, known as Producer Price Index(PPI) for finished goods was driven by decreases both in energy and food costs.

Economists had expected a flat reading.

The decline in wholesale prices over the past year ended in September was 4.8 percent and the 10th straight month of annual declines.

Core inflation, which excludes energy and food, fell 0.1 percent in September. In the year ending last month, the core prices rose 1.8 percent.

In September, gasoline price fell 5.4 percent, and heating oil, which dropped 9.8 percent. Those changes followed steep rises in August, when wholesale gas prices jumped 23 percent.

The department said that prices for consumer foods inched down 0.1 percent last month, reversing a 0.4 percent rise in August.

The Federal Reserve believes inflation will remain subdued for some time as the country struggles to emerge from the worst recession since World War II.

The Fed said recently that they planned to keep a key bank lending rate at a record low near zero for an "extended period."

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