U.S. producer prices fell in February for a fourth straight month, pointing to tame inflation that could argue against an anticipated June interest rate hike from the Federal Reserve.

    The Labor Department said Friday its producer price index (PPI) for final demand declined 0.5 percent as profit margins in the services sector, especially gasoline stations, were squeezed, and transportation and warehousing costs fell.

    “The underlying message appears to be that pipeline inflationary pressures remain quite weak, even as energy prices have stabilized and gasoline prices have drifted modestly higher,” said Millan Mulraine, deputy chief economist at TD Securities in New York.

    The PPI had dropped 0.8 percent in January. In the 12 months through February, producer prices fell 0.6 percent, the first decline since the series was revamped in 2009.

    Economists had forecast the PPI rising 0.3 percent last month and remaining unchanged from a year ago.

    Prices for U.S. government debt gained marginally on the inflation data. U.S. stock indexes fell sharply, as a strong dollar threatened to erode the profits of multinational companies and tumbling crude prices pressured energy firms including Chevron Corp. and Noble Corp.

    While the weak inflation backdrop would normally be associated with a struggling economy, there appears to be little reason to worry given the fairly robust labor market.

    A separate report from the University of Michigan showed its consumer sentiment index fell 4.2 points to 91.2 in early March. (SD-Agencies)