Producer Prices Decreased 0.2% In November --- Drop Caused by 1.5% Fall For Energy and Decline Of 0.5% in Food Costs
WASHINGTON -- In a sign that inflation remains under control even as the economy regains momentum, prices at the wholesale level dropped 0.2% in November, the Labor Department said.</br></br>The fall in the producer price index was caused by a big 1.5% drop in energy costs, reflecting the recent weakness in crude oil prices, and a 0.5% decline in food prices. Excluding these volatile sectors, producer prices edged up 0.1% in November after dropping 0.1% the month before. For the year ended in November, wholesale prices rose 1.3%.</br></br>Analysts said the latest inflation report indicates wholesalers are refusing to raise prices even as demand for their goods is picking up.</br></br>"Wholesalers and retailers are competing on a price containment basis," said Samuel Kahan, chief economist of Fuji Securities Inc. in Chicago. "Instead, they are making profits through productivity gains."</br></br>Prices were subdued across the board last month. Consumer goods and capital equipment showed moderation in pricing. There was a 1% rise in the price of passenger cars last month, following a drop of 2.3% in October. Prices for goods at the intermediate and crude stages of production in November dropped for the second straight month. Excluding food and energy, prices of intermediate goods were unchanged in November while prices of crude goods declined 0.9%.