Small-business owners see no benefit from falling producer prices

The Producer Price Index for Finished Goods dropped for the fifth straight month, falling a seasonally adjusted 1.9 percent in December, according to a report Thursday by the Bureau of Labor Statistics of the U.S. Department of Labor.

This decrease followed a 2.2 percent decline in November and a 2.8 percent drop in October. Despite the continuing fall, however, there's no apparent benefit for small retail businesses that buy finished goods for their stores.

“Prices are coming down, but it’s not a good thing,” said Brian Weber, senior associate at Houlihan Smith & Company Inc. investment bank in Chicago. “They’re coming down because demand is falling out, which is certainly not a good thing for small businesses.”

Accordingly, many small businesses owners in Chicago aren’t fooled and do not expect their businesses to be affected by the declining costs of wholesale goods. In fact, the Core PPI Index, which omits the costs of food and energy goods, rose 0.2 percent in December.

http://news.medill.northwestern.edu/chicago/news.aspx?id=111603