U.S. producer prices fell in February on lower energy and food costs, but prices were unchanged from a year ago, suggesting the downward trend was near an end.
The Labor Department said on Tuesday its producer price index dropped 0.2% last month after edging up 0.1% in January. In the 12 months through February, the PPI was unchanged after falling 0.2% in January.
It was the first time since January 2015 that the year-on-year PPI did not decline. Economists polled by Reuters had forecast the PPI dipping 0.2% last month and gaining 0.1% from a year ago.
With the dollar losing some momentum after gaining 20% against the currencies of the United States' main trading partners between June 2014 and December 2015, imported deflation is starting to wane. That could curb further declines in producer prices.
But oil prices, which tumbled by as much as 4% on Monday on concerns that a six-week market recovery has gone beyond fundamentals, remain a wild card. So far this year, the dollar has gained about 0.9% on a trade-weighted basis.
Last month, energy prices fell 3.4%, with gasoline prices declining 15.1% - the biggest drop in a year.
Energy prices fell 5.0% in January.
Wholesale food prices decreased 0.3%, pulled down by a 19% tumble in the cost of fresh and dry vegetables - the largest fall since April 2011.
Prices for services were unchanged in February after rising for three straight months.
A key measure of underlying producer price pressures that excludes food, energy and trade services rose 0.1% last month after advancing 0.2% in January. The so-called core PPI was up 0.9% in the 12 months through February. That was the largest gain since July 2015 and followed a 0.8% increase in January.