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US wholesale prices fell 0.2 percent in October

Associated Press Modified: November 14, 2012 at 11:00 am •  Published: November 14, 2012
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The 0.2 percent drop in core prices in October reflected in part big declines in the price of passenger cars and light trucks. Without those declines, core prices would have been unchanged.

Low inflation means consumers have more money to spend, which helps the economy. It also gives the Federal Reserve more room to keep interest rates low in an effort to spur economic growth. If prices were to begin rising rapidly, the central bank might be forced to raise rates in response.

Economists believe that the modest gains in wholesale prices should translate into further moderation in consumer inflation, keeping it close to the Fed's 2 percent inflation target and allowing the central bank to keep focusing its policy on efforts to boost economic growth and reduce the unemployment rate.

The government will issue its October report on consumer prices on Thursday and economists are also expecting moderation at the retail level because of falling gas prices.