Consumer Relief: Lower Fuel Costs Push Down Wholesale Prices

Led by a drop in fuel costs, U.S. wholesale prices fell in April for the first time in four months, and by the biggest single-month decline since October.
The Labor Department said Friday that the producer price index dropped 0.2 percent in April, compared to the previous month. It also marked the first decrease since December.
Most economists had predicted the index would not change.
Modest wholesale inflation reduces pressure on manufacturers and retailers to raise prices on consumers. This boosts the buying power of Americans which is a major driver of economic recovery.
Consumer spending makes up 70 percent of economic activity.
Sliding gas prices seem to confirm the outlook of Federal Reserve policy makers who have dismissed long-term concerns over fuel and inflation. The central bank has not budged from its posture of keeping interest rates low at least until late 2014.
For the 12 months that ended in April, wholesale prices have increased just 1.9 percent. That represents the smallest year-long change since October 2009.
And it’s considerably down from a peak year-over-year surge of 7.1 percent in July 2011, when higher gas and food costs helped send wholesale prices higher.

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