February Producer Prices, Retail Sales Fall

Date: March 21, 2016

Lower Fuel Costs Leading To Inflation Below Fed Goals

According to the latest Labor Department data, February saw producer prices decline 0.2%, in line with economists’ forecasts, Bloomberg News reported. Core PPI was unchanged in February and up 1.2% for the 12 months ending Feb. 29. Bloomberg said wholesale prices have been “held down by lower fuel costs that have kept inflation languishing below the Federal Reserve’s goal.” According to Reuters, PPI was unchanged on an annualized basis, suggesting a deflationary trend had played out. The AP, noting that the PPI data show the cost of both energy and food declined last month, says the index was down for the fifth time in seven months, “underscoring that inflation remains a no-show.”

Meanwhile, the latest Commerce Department data indicated that US retail sales fell in February by 0.1%, “about as expected,” according to Investor’s Business Daily “but January sales were revised sharply lower.” Economists had forecast a 0.2% gain for the first month of 2016, but revised figures show a 0.4% decline. “That brings the year-over-year gain in sales down to a lackluster 3.1% from a year ago in nominal terms,” IBD said, adding that the annualized increase would be 4.5% if gasoline sales, which also declined in February, were excluded.

What This Means For Small Businesses

Small businesses have been struggling with economic uncertainty due to a Federal Reserve bent on a “wait and see” approach. CNBC recently quoted NFIB Chief Economist Bill Dunkelberg as saying, “The major impact of Fed policy, or lack thereof, is basically producing immense uncertainty and no confidence. So people won’t put their money on the table, they won’t expand, they won’t hire.” Data like the latest producer and retail sales figures are unlikely to do anything to boost the confidence of small business owners.

Additional Reading

The Wall Street Journal also covered the latest producer price index data.

Note: this article is intended to keep small business owners up on the latest news. It does not necessarily represent the policy stances of NFIB.

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