The US Producer Price Index slipped by 0.6% during the month of February, as has been confirmed by the Labor Department report that was released on Wednesday. The main reason for the decline seems to be the lower energy costs. The actual figure has beaten the analysts' estimate of a fall of 0.3%.

The decline recorded by the PPI for February has been the biggest since the July fall of 1.2%. We are all now left wondering as to what impact the development would have on the still fragile economy of the country as a whole. One thing which seems to be definite because of the fall is that the inflation will be more-or-less subdued and tamed for quite sometime now.

A low rate of inflation is good news for sure, as it would allow the Federal Reserve to be more lenient with the benchmark interest rates and keep them at the near zero level, where they have now managed to stay for quite sometime.

In January, the PPI had actually climbed by 1.4%, and experts were almost sure that the Fed would increase the interest rates, but that did not happen because the rise did not appear to be substantial enough for the agency to change the benchmark rates.

The Fed's decision to keep the interest rates low is just what the economy of the country needs right now, as it is still not as stable as required. The low rates would ensure that the growth of the economy is not hampered and the consumer confidence, which is now slowly building up, is not hurt once again.

All eyes are now on the Consumer Price Index numbers for February, which would be released on Thursday. The Fed will be watching it closely to study the rate of inflation and we will be keeping a close eye as well because in an economy which is still vulnerable and fragile, a negative CPI reading might just turn out to be one of the bad developments.