US producer prices surprise Wall St

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The Independent Online
Prices charged by manufacturers in the US were flat last month, a surprise that left Wall Street economists optimistic about inflation prospects, writes Diane Coyle. The rate of inflation in factory gate prices has been at or below 2 per cent for more than two years despite cost pressures - in contrast to Britain, where producer price inflation has crept up in recent months.

The news that there was no rise in prices charged for finished goods in March came after two months of unexpectedly high increases. Chris Iggo, an analyst at Chase Manhattan in New York, said: ``This will make the Fed more confident that a soft landing for the economy will be achieved.''

There was a small increase of 0.1 per cent in "core" factory gate prices, excluding food and energy. Both of these categories saw price falls. Finished food product prices were down 0.2 per cent, despite floods in California. Car prices also declined, by an unexpected 0.4 per cent.

There was even better news on prices paid for materials - or ``crude'' goods. They fell 1.3 per cent last month, mostly due to lower food prices. This was the biggest one-month decline since September. Crude prices overall were 1.7 per cent lower than a year earlier.