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U.S. wholesale prices unexpectedly fell 0.2% in May

U.S. wholesale prices unexpectedly decreased in May, falling 0.2% from the previous month. File Photo by Brian Kersey
U.S. wholesale prices unexpectedly decreased in May, falling 0.2% from the previous month. File Photo by Brian Kersey | License Photo

June 13 (UPI) -- U.S. wholesale prices fell in May, the Labor Department reported Thursday, marking another signal of easing inflation a day after the Federal Reserve chose to hold interest rates steady.

The producer price index, the Fed's preferred inflation gauge, fell 0.2% in May -- the biggest drop in the producer price index this year and the most since the PPI fell 0.3% last October.

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On an annual basis, the PPI was up 2.2% from May 2023.

The monthly decline was lower than the Wall Street's forecast of a 0.1% rise after the index had increased by 0.5% in April.

It marked just the fourth time over the last 12 months that the PPI showed a decrease over the previous month.

Final demand for goods tumbled 0.8% in May, its largest drop since it fell 1.2% in October 2023. Final demand energy prices dropped 4.8% while food prices slipped 0.1%. The core PPI, less food and energy, rose 0.1%.

The Labor Department said final demand services went unchanged in May after seeing a 0.6% increase in April. The indexes for trade services rose 0.2% while services, less trade, transportation and warehousing increased by 1%

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Inside the services index for May, the margins for fuel and lubricants retailing jumped 12.2% while prices for airline passenger services slipped 4.3%.

The report was the latest bit of good news on inflation after the consumer price index for May was also cooler than expected Wednesday, remaining unchanged from the previous month.

Later Wednesday Federal Reserve Chairman Jerome Powell said inflation had eased from a high of 7% to 2.7% but was "still to high" as he held interest rates steady but indicated one interest rate cut was possible by the end of the year.

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