U.S. wholesale prices point to muted inflation pressures

Fri Dec 13, 2013 11:31am EST
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By Lucia Mutikani

WASHINGTON (Reuters) - U.S. producer prices fell for a third straight month in November, pointing to a lack of inflation pressure that could give the Federal Reserve pause as it weighs the future of its bond-buying stimulus.

The Labor Department said on Friday its seasonally adjusted producer price index slipped 0.1 percent as gasoline prices maintained their downward trend. Prices received by the nation's farms, factories and refineries fell 0.2 percent in October.

It was the first time since October of last year that producer prices had fallen for three consecutive months and analysts had expected prices would be flat in November.

"There is no inflation coming up the pipe into what producers are receiving for their goods, which means they are not going to be passing anything on to consumers," said Omair Sharif, an economist at RBS in Stamford, Connecticut.

In the 12 months through November, producer prices gained 0.7 percent after rising 0.3 percent in October.

Wholesale prices stripping out volatile food and energy costs nudged up just 0.1 percent last month after rising 0.2 percent in October. The 12-month gain slipped to 1.3 percent from 1.4 percent in October.

U.S. Treasuries prices rose marginally as the data suggested inflation would remain below the Fed's 2 percent target for some time to come, eroding the case for withdrawing stimulus soon. Some analysts think the Fed could ease back on support as early as the next meeting on December 17-18, although most tip early 2014.

Stocks on Wall Street were up modestly, while the dollar was little changed against a basket of currencies.   Continued...

A shopper walks by the sodas aisle at a grocery store in Los Angeles April 7, 2011. REUTERS/Mario Anzuoni