WASHINGTON—The prices charged by farmers, manufacturers and other producers fell in October for the second straight month, fresh evidence that there is little sign of inflation in the U.S. economy.
The Labor Department said Friday the producer price index, which measures price changes before they reach the consumer, fell 0.4 percent last month. That follows a 0.5 percent drop in September. In the past year, wholesale prices have dropped 1.6 percent. That’s the steepest drop since the government began tracking the data in 2010.
Tepid wage increases have limited retailers’ ability to raise prices, keeping a lid on inflation. Weak price gains pose a challenge for the Federal Reserve, which targets a 2 percent inflation rate as a cushion against falling prices, or deflation.
Still, there are signs that the deflationary impact of lower gas prices may be starting to fade. Wholesale gas prices rose 3.8 percent in October, the government said.
And earlier this week, Eric Rosengren, president of the Federal Reserve Bank of Boston, struck an upbeat note on the economy and said he is “reasonably confident” inflation will soon reach 2 percent.
In October, wholesale prices were pulled lower by a sharp drop in the profit margins reported by gas stations and by falling prices for food. Prices for pickup trucks also dropped sharply. Such declines typically occur in October, when new models of cars and trucks are introduced.
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