Weak margins hit US producer inflation

US producer prices fell in February for a fourth straight month, pointing to tame inflation that could argue against an anticipated June interest rate hike from the Federal Reserve.

The labor department yesterday said its producer price index (PPI) for final demand declined 0.5% as profit margins in the services sector, especially petrol stations, were squeezed, and transportation and warehousing costs fell.

“The underlying message appears to be that pipeline inflationary pressures remain quite weak, even as energy prices have stabilised and gasoline prices have drifted modestly higher,” said Millan Mulraine, deputy chief economist at TD Securities, New York.