Wholesale Prices Fall More Than Expected in March

Washington, DC, April 14, 2009--The government reported Tuesday that prices at the wholesale level fell more sharply than expected in March amid energy price declines.

Following two consecutive months of gains in the producer price index, the PPI fell 1.2% in March, driven by 5.5% decline in energy prices, including a 13% drop in gasoline, the Labor Department reported. Meanwhile, food prices fell 0.7%.

Over 12 months, the PPI was down 3.5% -- the largest 12-month decline since a drop of 3.9% in 1950.

Deflation marks a sustained period of declining prices for goods and services. While lower prices intuitively seem good for consumers, deflation can also lead to lower pay, job losses and ongoing weak growth, which can be difficult to overcome.

The March core PPI, which excludes food and energy costs, was unchanged. Over 12 months, the core PPI was up 3.8%.

Economists were expecting the March PPI to fall 0.5%, and for the core to gain 0.1%.