BY LUCIA MUTIKANI
U.S. producer prices recorded their biggest drop in more than five years in January as the cost of energy and a range of other goods tumbled, hinting at a disinflationary trend that could argue against the Federal Reserve raising interest rates.
Other reports on Wednesday showed housing starts fell last month, while manufacturing output rose marginally, signs of moderate economic growth early in the first quarter. “That, along with persistently cool measures on inflation, will complicate decisions on the timing of a rate hike by the Fed.
There is a clear consensus to obtain a liftoff this year, but the timing is still cloudy,” said Diane Swonk, chief economist at Mesirow Financial in Chicago.
The Labor Department said its producer price index for final demand fell 0.8 percent, the biggest drop since the revamped series started in November 2009, after dipping 0.2 percent in December. It was the third straight month of decline in the PPI.
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