Washington, DC, March 21, 2006--Wholesale prices dropped .4% in February, the biggest decline in nearly three years, the Labor Department reported Tuesday.
Energy prices fell 4.7%, also the biggest drop since April 2003. Food prices fell 2.7%, the most in four years.
Economists expected the PPI to fall about 0.3%.
The core producer price index--which excludes food and energy prices--rose 0.3%, stronger than the 0.1% gain expected by economists.
In the past year, the PPI has risen 3.7%, compared with 5.7% last month. The core rate has accelerated to a 1.7% increase in the past 12 months, compared with 1.5% last month
The main factor behind the falling wholesale prices was energy. Gasoline prices fell 11%, the most since April 2003, just after the invasion of Iraq. Natural gas prices fell 4.1%, the most since October 2001.
Energy prices have risen since the February data were collected.
Wholesale energy prices are up 17% in the past 12 months.
Finished capital goods prices rose 0.1%. Prices of light trucks rose 0.5%. Prices of construction equipment increased 1.4%.
Prices of drugs increased 0.7%.