Wholesale Prices Fall Unexpectedly in the U.S. Market

For the fourth consecutive month, the wholesale prices in the U.S. feel short of expectations of market experts. The producer price index declined by 0.5 percent in February compared to 0.3 percent gain predicted by 73 economists surveyed by Bloomberg. The decline in wholesale prices means lower margins for producers, wholesalers and retailers. It would offer relief to consumers as the food prices are expected to remain low.

The producer price index declined by 0.5 percent in February compared to 0.8 percent decline in January. The Labor department report suggested that with dollar firming up against other major currencies, the cost of imports has decreased. The crude oil slump during the past few months has also contributed in keeping inflation at low level.

The profit margin for most wholesalers has taken a hit as PPI dropped for fourth consecutive month. The inflation data led to marginal increase in the rate of U.S. government debt. The stock markets were down, after the Dow Jones and Nasdaq touched multi-year highs in the recent weeks.

In a note to investors, Ian Shepherdson, the chief economist at Pantheon Macroeconomics, said, "The strong dollar is forcing lower prices onto U.S. manufacturers, and will continue to do so for some time yet."

Big exporters from the U.S. have indicated that the firm dollar has hit their business as the competitiveness of the American products in the international market has reduced. The prices in the local market have also declined.

Excluding energy, food and trade services, the PPI has registered an increase of one percent in February 2015 compared the same month last year. The food prices have declined by 1.6 percent in February, compared to the prices a month earlier. The vegetable prices witnessed a sharp decline of 17.1 percent, according to the latest released data.