Wholesale Price Drop

The Labor Department reported that wholesale prices fell 0.9% last month, nearly double the 0.5% decline that economists had been expecting, according to CNN Money. The price moderation followed three months in which wholesale costs had shot up at levels exceeding 1% a month as energy costs had surged.

Core inflation, which excludes energy and food, edging up just 0.2% in August, right in line with expectations, and well below the 0.7% spike of the previous month. The sharp retreat in wholesale prices will be welcome news at the Federal Reserve, which had been worried that it might have to start raising interest rates if inflation pressures did not start to moderate.

Even with the August decline, wholesale prices over the past 12 months are up by 9.6%, the second biggest 12 month price change in the past 27 years, exceeded only by a 9.8% jump for the 12 months ending in July.