WASHINGTON (AP) — Inflation was limited last month because of falling gasoline and food costs that have lowered the prices that U.S. companies received for their goods and services.
The Labor Department said Wednesday that the producer price index fell 0.1 percent in September from the previous month. The index measures the cost of goods and services before they reach the consumer.
Wholesale gas prices dropped 2.6 percent. Food costs fell 0.7 percent because of lower prices for corn, soybeans and meats. The costs for light trucks and aircraft rose slightly, but broader inflation was held in check.
Excluding the volatile categories of food, energy and retailer and wholesaler profit margins, prices dropped 0.1 percent.
In the past year, producer prices have risen just 1.6 percent, slightly below the Federal Reserve's target.
The Fed targets inflation at about 2 percent to protect against deflation, since falling prices could pull down wages and potentially trigger another recession. At the same time, the Fed tries to prevent excessive inflation that would erode the buying power of consumers and businesses.
Inflation has been relatively modest for much of the five-year recovery from the last recession. That's largely because few workers have received significant pay increases, making it more difficult for businesses to charge higher prices.
In August, a separate measure of consumer prices fell 0.2 percent in August, as the cost of gasoline, airline tickets and clothing prices all dropped. Over the past 12 months, consumer prices have risen just 1.7 percent.
An economic slowdown in Europe, China, Japan and elsewhere should further mute inflationary pressures because it's driving the value of the dollar higher. A stronger dollar often reduces the cost of commodities such as oil that the financial markets price in U.S. currency.
Inflationary pressures have also been contained by the meager paychecks for most Americans.
Average hourly pay fell a penny to $24.53 in September That's an increase of less than 2 percent over the past year, meaning pay is barely matching inflation.