US Producer Price Index Continues Decline

Date: September 14, 2015

Petroleum Price Declines Lead Falling Consumer Costs, Labor Department Says

According to Bureau of Labor Statistics data on US import prices, for August, US import prices declined 1.8%, a further decline from July’s 0.9% decrease. Declines for the month continued to be led by petroleum price declines. Labor Statistics data now show that import prices have fallen for 12 of the past 14 months, Reuters noted. For the 12 months since August 2014, import prices are down 11.4%, the sharpest yearly decline since September 2009. Petroleum prices by themselves were down 14.2% in August, the biggest decline since January after falling 5.9% in July. Import prices other than petroleum were still down in August, although by a much lower amount, falling 0.4%. This marked the eighth month in a row that imports excluding petroleum saw a decline in prices. Reuters suggested this is likely due to the US dollar’s 17.5% increase in value since June 2014 against currencies of America’s major trading partners.

What Happens Next

The low inflation environment is expected to continue. Bloomberg News noted that the restraint in the growth of wholesale costs is a “signal that inflation will remain weak” and that it “may linger below the Federal Reserve’s goal for some time.” The article also cites Fed policymakers, who note that falling oil and gas prices are only “transitory influences on inflation.”

What This Means For Small Businesses

Falling import prices are good for the US economy, and good for US small businesses, as they mean declines in capital expenses. Like the consumers they serve, small businesses are benefitting from lower prices on most goods, particularly fuel used to run vehicles and other equipment that power small business.

Additional Reading

The AP also noted the Bureau of Labor Statistics’ August import 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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