AlHijjah 29, 1433, Nov 14, 2012, SPA -- Wholesale inflation fell in October as a big decline in gasoline and other energy prices offset an increase in food costs, the U.S. government reported Wednesday. The Labor Department said its producer price index (PPI), which measures price pressures before they reach consumers, fell 0.2 percent in October. It was the first drop since May and followed large gains of 1.1 percent in September and 1.7 percent in August, both driven by spikes in energy costs. Energy prices retreated in October, falling 0.5 percent, but food costs rose 0.4 percent as the summer drought continued to pressure some food prices. The drop in energy prices included a 2.2 percent decline in gasoline costs, the biggest since July, and a 3.3 percent decrease in costs of home heating oil. Core PPI, which excludes energy and food, fell 0.2 percent last month, the biggest decline in two years. Over the past 12 months, core prices were up a moderate 2.1 percent, evidence that inflation remains contained. The drop in core wholesale prices partly reflected big declines in the price of passenger cars and light trucks. Excluding those declines, core PPI would have been unchanged in October. Economists believe the modest gains in wholesale prices should translate into further moderation in consumer inflation. Low inflation means consumers have more money to spend, which helps the economy and gives the Federal Reserve more room to keep interest rates low in an effort to spark economic growth.
