Wholesale Prices Fall

From Bloomberg:

Aug. 18 (Bloomberg) — Wholesale prices in the U.S. fell more than forecast in July as energy costs receded, capping the biggest 12-month drop on record and showing inflation will not be an immediate concern for Federal Reserve policy makers.

The 0.9 percent decrease in prices paid to factories, farmers and other producers followed a 1.8 percent gain in June, the Labor Department said today in Washington. Excluding food and fuel, so-called core prices unexpectedly fell 0.1 percent.

A record amount of excess capacity will prevent production bottlenecks from developing, indicating wholesale prices will be slow to recover even as the economy improves. A lack of inflation was one reason Fed policy makers last week reiterated a pledge to keep the benchmark interest low for an “extended period.”


2 Responses to “Wholesale Prices Fall”

  1. 1 Cole Norton September 23, 2009 at 8:54 PM

    This article is very intriguing, as it shows that with the current economy in the shape it is in, people are resorting to different methods of saving money. Instead of air-conditioning, people may be using fans or opening windows, and are using other methods that account for prices of commodities decreasing. All of the savings people have created reflect the surplus of foods and other goods, and because of this, the major companies are forced to lower their prices so some profit can be made. Which would explain why the inflation rates are going to remain low, if they raise them to soon, the cycle would just repeat.

  2. 2 TTS06 December 17, 2009 at 2:26 PM

    Of course wholesale prices will fall. To make money you have to sell and if you can’t sell then you have to lower the prices.

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