The Bureau of Labor Statistics reported that producer prices fell 0.3 percent in October, a decline led mostly by lower energy prices. Indeed, the producer price index (PPI) rose last month for the same reason, a sign of the ups and downs of energy prices since the summer.

Energy costs fell 1.4 percent in October, reversing the 2.3 percent gain in September. The finished cost of food items was up 0.1 percent, its slowest pace since May.

When food and energy costs were omitted, for instance, core inflation in October was unchanged from September. Since October 2010, the cost of finished goods has risen 5.9 percent.

For manufacturers, the cost of manufactured goods declined by 0.6 percent – a welcome relief since prices have been elevated for much of the past year. Over the last 12 months, the price of finished manufactured goods was up 7.2 percent, with this rate moving down over the past few months. The year-over-year figure in September had been 8.9 percent.

The largest declines in monthly producer prices among manufacturers were seen in petroleum and coal products (down 4.2 percent), primary metals (down 1.8 percent), beverage and tobacco (down 1.1 percent) and food (down 0.6 percent). Still, some sectors are experiencing continuing increases in raw material prices, including transportation equipment (up 1.7 percent), textile mills (up 0.9 percent) and textile product mills (up 0.5 percent).

Lower food and energy costs helped to drive down the cost of intermediate and crude goods, which were off 1.1 percent and 2.5 percent, respectively.

This report is a sign that inflationary pressures for the overall economy and for manufacturers has eased significantly over the past few months. The declines in food and energy prices are helping to reduce what has been one of the major challenges for manufacturers over the course of the last year – elevated prices. Lower intermediate and crude costs indicate that this trend should continue in the coming months, and this should mean that inflationary pressures will remain modest as we move into 2012.

Tomorrow, we will receive new data from BLS on consumer prices, which are also expected to reflect some easing due to lower food and energy costs.

Chad Moutray is chief economist, National Association of Manufacturers.