US wholesale prices dropped in May, adding to evidence that inflation pressures are cooling

WASHINGTON (AP) — Wholesale price increases fell in May, the latest sign that inflation pressures in the United States may be easing as the Federal Reserve considers a timetable for cutting interest rates.

The Labor Department reported Thursday that its producer price index — which tracks inflation before it reaches consumers — declined 0.2% from April to May after rising 0.5% the month before, pulled down by a 7.1% plunge in gasoline prices. Overall, it was the biggest drop in producer prices since October.

Measured from a year earlier, wholesale prices were up 2.2% last month, edging down from a 2.3% increase in April. Excluding volatile food and energy costs, so-called core producer prices were unchanged from April and up 2.3% from May 2023.

Wholesale food prices dropped 0.1% from April to May. Egg prices dropped 35%. Computer and computer equipment fell 1.2%, and household appliance prices slid 0.5%.

The producer price index can provide an early read on where consumer inflation is headed. Economists also watch it because some of its components, including some healthcare and financial services costs, are used to compile the Fed’s preferred inflation gauge, known as the personal consumption expenditures price (PCE) index.

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