Producer Price Index Soft

Prices at the wholesale level proved soft in February, up an as-expected 0.2 percent and down from January's 0.4 percent gain. Year-on-year, producer prices rose 1 tenth to 2.8 percent which is still down from the 3.1 percent rate hit late last year.

Goods prices fell 0.1 percent in February with energy also down as well as food which shows an unusual 27 percent monthly plunge for wholesale vegetables. Trade service prices fell 0.2 percent for the second decline in three months in closely watched results that point to weakness. Construction prices managed only a 0.1 percent February gain with finished goods prices for light trucks, cars and computers all falling sharply.

However much price readings may be soaring in reports like the Philly Fed or the ISM, today's results, which follow yesterday's consumer price report and last week's average hourly earnings data, confirm the month of February as a subdued one for inflation. Accelerating inflation won't be an immediate issue at next week's FOMC meeting.