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U.S. consumer sentiment, producer prices falls

Staff writer |
U.S. consumer sentiment fell in early March as the confidence of lower and middle income households slid, the Thomson Reuters/University of Michigan index of consumer sentiment revealed on Friday.

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The preliminary reading of the consumer sentiment in March, which records the figure for the first half of a month, edged down to 91.2 from 95.4 in February.

"Consumer optimism slipped in early March among lower and middle income households while confidence improved among households with income in the top third," survey director Richard Curtin said in a statement.

"The renewed concerns expressed by lower and middle income households mainly involved income declines and higher utility costs as well as disruptions to shopping and businesses due to the harsh winter," said Curtin.

The sub-index of current conditions, reflecting Americans' perceptions of their financial situation and whether they consider it a good time to buy big-ticket items like cars, fell to 103 from 106.9 last month

The sub-index gauging consumer expectations for six months from now, which more closely projects the direction of consumer spending, decreased to 83.7 from 88 in February.

"Despite the small temporary setbacks, the overall level of consumer confidence remains favorable enough to support 3.3 percent growth rate in personal consumption expenditures during 2015," said Curtin.

At the same time, the U.S. producer prices fell for four straight months in February, the latest sign for weak inflationary pressures in the U.S.

The Producer Price Index (PPI), a gauge of inflation at the factory gate, fell 0.5 percent in February, following a 0.8 percent decline in January, the Labor Department said Friday.

Excluding the volatile food and energy sectors, the so-called "core" PPI went down 0.5 percent, compared with a 0.1-percent decline in January.

In the month, about 70 percent of the decline in PPI can be attributed to a 0.5-percent decrease in index for final demand services, said the Labor Department. Prices for final demand goods also moved down 0.4 percent.

On a year-on-year basis, the PPI declined 0.6 percent in February, while the index had no change in the previous month.

The low inflation pressure will be a factor as policy makers weigh when to start raising short-term interest rates. Federal Reserve chair Yellen has said that recent drop in inflation was mainly due to oil price drop, and that the Fed is reasonably confident that inflation will move back over the medium term toward the objective, as the labor market conditions continue to improve further.

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