Producer Prices Fall More Than Expected

- The Producer Price Index for February fell 1.4% versus estimates of a .2% decline and a .3% increase in January.
- The PPI Ex Food & Energy for February rose .3% versus estimates of a .1% increase and a .4% rise in January.

BOTTOM LINE: Producer prices fell in February by the most in almost three years, Bloomberg reported. Prices of raw materials dropped 9.2%. Foods prices fell 2.7%, the largest decline since April 2002. Producer Prices have now risen 3.7% over the last 12 months, down from a 5.7% y-o-y gain last month. I continue to believe inflation readings will decelerate throughout most of the year as commodity prices fall further, US growth slows to average rates and unit labor costs remain subdued.