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Strategies & Market Trends : Graham and Doddsville -- Value Investing In The New Era -- Ignore unavailable to you. Want to Upgrade?

To: porcupine --''''> who wrote (1448)	3/12/1999 10:04:00 AM
From: porcupine --''''>	Read Replies (1) \| Respond to of 1722

Wholesale Prices: Biggest Decline In 13 Months By Caren Bohan WASHINGTON (Reuters) - U.S. wholesale prices recorded their biggest drop in more than a year in February, the government said Friday, adding to evidence that inflation is absent from the roaring economy. The Producer Price Index, measuring prices received for goods produced by the nation's factories, farms and refineries, fell 0.4 percent last month after a 0.5 percent rise in January, the Labor Department said. February's decline was the steepest since a decrease of 0.6 percent in January 1998. The milder-than-expected report should help soothe concerns that the Federal Reserve could push up interest rates to rein in the economy. It combines with other reports, such as productivity statistics, to portray an economy remarkably free of inflationary pressures even as it steams ahead briskly. ''All in all, I think what you're seeing here is an economy that continues to be strong but with no inflation pressures,'' said Cheryl Katz, senior economist at Merrill Lynch & Co. ''Because there is no inflation pressure, the Fed will remain on hold,'' Katz told Reuters Television. The data's release prompted a rise in U.S. bond prices and led dealers to speculate that the Dow Jones Industrial average would break through the 10,000 mark later Friday. A big portion of the PPI decline was caused by falling food costs. Prices of meats and vegetables plummeted in February and were only partly offset by firmer prices for fish and fresh fruits. Energy costs were also sharply lower, falling 1.0 percent. Home heating oil costs fell a huge 4.1 percent and costs of natural gas and electricity eased. The gasoline component rose a slight 0.2 percent. But, even stripping out the volatile food and energy sectors, the so-called core PPI was flat, continuing a trend of soft wholesale prices that has taken hold over the past year and a half amid weakness in the global economy. U.S. economists polled by Reuters had forecast, on average, a 0.1 percent decline in the Producer Price Index and an increase of 0.1 percent excluding food and energy. Prices at the wholesale level were tame throughout a variety of sectors. The capital equipment component of the PPI, including printing presses, construction equipment, trucks and computers, showed a mere 0.1 percent rise. There was no sign of inflation either for products like clothing, home furnishings and cars. Nonfood consumer goods prices fell 0.3 percent, including a 0.3 percent drop in passenger cars. Economic problems in Asia, Russia and Latin America have exerted a downward force on U.S. inflation in two ways. They have depressed demand for farm products and raw materials such as oil. They also have led to cheapened imports, putting pressure on U.S. producers of cars, electronics and other goods to keep down their prices.