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Last Updated: Tuesday, 21 March 2006, 15:40 GMT
Sharp fall in US producer prices
Truck delivering petrol in the US
Energy costs fell during February
Wholesale prices in the US fell by a steeper-than-expected rate last month, the biggest fall in almost three years as energy and food prices dropped.

The Labor Department's producer price index (PPI) fell 1.4% in February, far more than the 0.2% forecast by Wall Street economists.

However, the core index, which excludes food and energy prices rose 0.3%.

Energy prices fell by 4.7% in the month, dragging down the headline PPI figure, the Labor Department said.

Fuel prices dropped 11%, the biggest fall since April 2003, while natural gas prices fell 4.1%.

The Fed still has one, or maybe two more rate increases to go, but that's pretty much it
David Katz, Matrix Asset

However, energy prices have risen since February's figures were collected.

Analysts were unruffled by the rise in the core rate of wholesale inflation.

"I wouldn't read too much into these numbers. Yes, we had an increase in core PPI, but it is not worrisome," said David Katz, chief investment officer at Matrix Asset Advisors.

"It's not an indication inflation is really brewing up. We follow in the camp that the Fed still has one, or maybe two more rate increases to go, but that's pretty much it."


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