By Martin Crutsinger
WASHINGTON: A big decline in food costs helped hold down wholesale prices in September, contributing to a 0.1 percent decline, the first drop since April.
The slight dip followed a 0.3 percent rise in prices in August, the Labor Department said Tuesday. Wholesale food prices fell 1 percent, led by a plunge in vegetable prices.
The lower food costs helped offset a 0.5 percent rise in energy prices. That increase reflected higher prices for home heating oil, diesel fuel and natural gas. Gasoline prices, which had shot up 2.6 percent in August, dipped 0.1 percent in September.
Excluding volatile food and energy, so-called core prices rose a slight 0.1 percent in September and have risen a modest 1.2 percent over the past 12 months.
Aside from sharp swings in gas prices, consumer and wholesale inflation has barely risen in the past year. Overall wholesale prices were up just 0.3 percent for the 12 months ending in September. It was the slowest increase since the 12 months ending in October 2009, a period that included the Great Recession.
The combination of modest economic growth and high unemployment has kept wages from rising quickly. That’s made it harder for retailers and other firms to raise prices. It has also allowed the Federal Reserve to continue its extraordinary stimulus measure to help boost the sluggish economy.
Energy prices did climb in late August as tensions rose over Syria. That increase accounted for two-thirds of the monthly gain in wholesale prices that month. But since then, oil and gasoline prices have fallen sharply.
For September, gasoline prices dipped slightly but other forms of energy showed gains during the month.
Among foods, vegetable prices, which had jumped in August, dropped 17.9 percent. Prices for carbonated soft drinks, beef and poultry also fell.
The Fed begins a two-day meeting Tuesday. It is expected to continue its $85 billion-a-month in bond purchases, which are intended to keep long-term interest rates low and encourage more borrowing and spending. A slowdown in hiring, along with the 16-day partial government shutdown, has made it more likely that the Fed will maintain its pace of bond buying into early 2014.
The report on wholesale prices was delayed by the shutdown. It had been scheduled to be released on Oct. 11.
The government will report Wednesday on consumer prices, a report that had originally been scheduled for release on Oct. 16. Consumer prices in August rose just 0.1 percent and in the 12 months through August consumer inflation was up 1.5 percent.