Big drop in energy bills offsets higher food prices

Overall, wholesale prices have risen 4.4 percent over the past 12 months, but core inflation, which excludes energy and food prices, is up a more subdued 1 percent.

“Underlying price pressures in the United States remain very subdued,’’ said Paul Dales, an economist at Capital Economics.

Economists said they expect inflation pressures to ease even more in coming months because many effects of the recession have yet to be felt.

Ian Shepherdson, chief US economist at High Frequency Economics, said he expects the 12-month rate for core wholesale prices to decline from the current 1 percent to below zero in coming months.

The 0.6 percent fall in the Producer Price Index in February was the biggest decline since a 1.2 percent drop in July. In January, wholesale prices had surged by 1.4 percent, driven higher by rising energy costs. Last month, energy prices plunged by 2.9 percent, with most of that decline reflecting a 7.4 percent drop in gasoline costs.

Gasoline prices have resumed rising over the past few weeks, however, and now stand at a national average of $2.79 — up from $2.62 a month ago and $1.91 a year ago.

The Producer Price Index report showed food costs rose 0.4 percent in February, the fifth straight monthly gain.

New-car prices rose 0.5 percent, the most since June.

The government will report on consumer prices today. Economists are expecting that report to show subdued inflation, as well, with overall retail prices and core prices rising by just 0.1 percent.

The worst recession since the 1930s has kept a lid on prices, allowing the Federal Reserve to keep a key interest rate at a record low of zero to 0.25 percent for the past 15 months.

The Fed ended its meeting on Tuesday by leaving its federal funds rate unchanged and declaring once again that it planned to keep rates “exceptionally low’’ for an “extended period.’’ Most economists believe the Fed will leave rates unchanged until the US unemployment rate, currently at 9.7 percent, begins to come down on a sustained basis, something they don’t think will occur until this summer.

Fed policy makers said that “inflation is likely to be subdued for some time.’’