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Producer Prices in U.S. Decrease for First Time in a Year

Wholesale prices in the U.S. unexpectedly fell in September for the first time in a year, propelled by a drop in fuel costs that continues into this month, Labor Department figures showed today.

The 0.1 percent decrease in the producer price index was the first decline since August 2013 and compares with the 0.1 percent gain median forecast of economists surveyed by Bloomberg. The so-called core measure, which strips out volatile food and fuel, was unchanged.

Oil costs plunged to a four-year low yesterday on concerns about slowing global growth, a sign prices in the production pipeline may stay muted. The lack of inflation pressures gives Federal Reserve policy makers room to keep interest rates near zero even as they’re on pace to end their unprecedented monthly bond purchases this month.

Another report today showed retail sales dropped more than forecast in September, reflecting a broad-based pullback that signals consumers are taking a breather. The 0.3 percent decrease followed a 0.6 percent August gain that was the biggest in four months, according to Commerce Department figures. The median forecast of 81 economists surveyed by Bloomberg called for a 0.1 percent decline.

The median estimate for producer prices was based on a survey of 71 economists. Projections ranged from a drop of 0.2 percent to an advance of 0.4 percent. Wholesale prices excluding food and energy were forecast to rise 0.1 percent after a similar gain in August.

Over the past 12 months, wholesale prices climbed 1.6 percent following a 1.8 percent increase the prior month. Core producer costs were also up 1.6 percent from September 2013.

Today’s producer price gauge is one of three monthly inflation reports, along with the consumer price index and the import cost measure, released by the Labor Department.

To contact the reporters on this story: Shobhana Chandra at schandra1@bloomberg.net; Victoria Stilwell in Washington at vstilwell1@bloomberg.net

To contact the editor responsible for this story: Carlos Torres at ctorres2@bloomberg.net

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