Investing.com — U.S. producer prices unexpectedly decreased on a month-on-month basis in May, dragged down in particular by a decline in the costs of gasoline, in the latest sign of cooling inflationary pressures in the world’s largest economy.
The (PPI) for final demand dipped by 0.2% last month, reversing an increase of 0.5% in April, according to Labor Department data. Economists had called for an uptick of 0.1%.
Prices for final demand goods were mostly driven lower by a 7.1% slump in gasoline prices, the Labor Department noted, while the measures for diesel fuel, chicken eggs, and electric power also fell. Services sector prices, meanwhile, were unchanged after climbing by 0.6% in April.
In the 12 months to May, the moved up by 2.2%, decelerating from 2.3% in April and slower than projections for an uptick of 2.5%.
Taking out more volatile items like fuel and food, PPI slowed to a of 0.0% and an annualized of 2.3%. Both were below April’s reading and economists’ predictions.
Thursday’s report comes after data earlier this week showed that consumer prices increased by a slower-than-expected year-on-year pace of 3.3% in May. In the wake of the numbers, officials at the Federal Reserve said they are seeing “modest” progress in its ongoing push to bring inflation down to its 2% target level.
However, policymakers, who had forecast as many as three interest rate cuts in March, signaled that they now project only one 25-basis point reduction this year. The central bank also held the key Fed funds rate steady at a more than two-decade high range of 5.25% to 5.5%.