US producer prices fell 0.6% in January

US producer prices shrank a slightly bigger-than-forecast 0.6 per cent in January, government data showed as energy prices declined sharply while core producer prices inched up as expected.

The Labour Department said the fall in producer prices was the largest since a 1.8 per cent drop in October 2006. The index gained 0.9 per cent in December.

Analysts polled by Reuters had predicted producer prices would fall 0.5 per cent while core, non-food, non-energy producer prices were forecast to rise 0.2 per cent last month, which they did.

Volatile energy prices have been buffeting cost pressures facing producers for some time and in January, energy prices fell 4.6 per cent versus a 2.2 per cent rise in December and a 6.0 per cent jump the month before.

The US Federal Reserve is watchful for evidence that solid growth and tight labour markets may be fuelling price pressures and the latest readings should reassure policy-makers.

Producer prices in January were 0.2 per cent higher compared with the same month last year, while the 12-month core reading stood 1.8 per cent higher.

Prices for passenger cars were down 0.1 per cent last month while the price of light trucks retreated a solid 1.4 per cent.