-Ian Shepherdson, chief economist at Pantheon Macroeconomics Ltd
US producer prices continued to decline in February, adding to signs of weak inflationary pressures in the world's number one economy. The producer-price index for final demand, which measures prices that businesses charge for their goods and services, dropped a seasonally adjusted 0.5% in February from the preceding month, the Labor Department reported. Stripping out the volatile food and energy categories, the index slid 0.5%. Much of the fall in overall prices was due to a 1.5% decline in trade services, which measures changes in margins received by wholesalers and retailers. The index declined 0.6% in February from the same period last year, falling into negative territory after no growth in January. Excluding food and energy, the PPI climbed 1% in February from a year earlier, the lowest reading ever registered and markedly undershooting the 1.6% year-over-year print economists had been expecting. With intensifying disinflation threat, the Fed may opt to maintain interest rates lower for longer, as some of dovish members want to make sure the central bank also achieves the inflation side of its dual mandate.
Meanwhile, consumer confidence in the US dropped in March to the lowest level in four months, with the corresponding index slipping to 91.2, down from 95.4 in February.
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