Wholesale Prices Fall Sharply Again

Washington, DC, Dec. 12, 2008--U.S. wholesale prices fell sharply for the second straight month as weak demand pulled down prices for energy supplies and other raw materials.

The producer price index fell 2.2% in November, almost matching the record 2.8% drop in October, the Labor Department reported Friday.
 
The decline was roughly in line with economists' forecasts.

Excluding volatile food and energy prices, the core PPI rose 0.1%, slightly higher than the flat reading expected.

Many economists believe there is a rising danger of deflation, which is a period of general price drops in an economy and can be as dangerous as inflation to economic growth.
 
But economists say the danger is some ways away. The PPI is up 0.4% in the past 12 months, while core prices are up 4.2%.
 
Energy prices plunged 11.2% in November after a 12.8% drop in the previous month. Gasoline prices had their second consecutive record monthly decline.