In August, the prices that producers receive for goods and services fell, a respite from inflation pressures that are threatening to send the U.S. economy into recession.
The Bureau of Labor Statistics reported Wednesday that the producer price index was down. Food, energy and trade service prices increased.
The economists were expecting the headlinePPI to fall.
On a year-over-year basis, headlinePPI increased 8.7%, a significant decline from the 9.8% increase in July and the lowest annual rise since August 2011. The core price index increased 5.6% from a year ago.
The decline in energy prices was the main reason for the fall in prices.
In August, the index for final demand energy fell by 6 percent, and the gasoline index fell by 12.7%, causing more than half of the decline in prices for final demand goods to go down. Consumer prices fell after briefly exceeding $5 a gallon at the pump.
The 0.4% increase in wholesale services prices for the month is a sign of a transition in the economy from a boom to a bust. Final demand service prices increased 0.4% for the month, with the balance of that increase coming from trade service prices.
The consumer price index data was higher than expected. The reports show what producers receive for finished goods, while the consumer price index shows what consumers pay.
Wholesale prices feed through the economy and can lead to inflation. Over the years it has become less important as manufactured goods make up less of a share of spending.
The Tuesday report caused the stock market to tank and the Federal Reserve to take action next week. The stock market futures were up after the report.
A three-quarter point interest rate increase was debated by markets. After the release, the market fully priced in a three-quarter point move, and there is now a one in three chance of a full percentage point hike.
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