WASHINGTON -- The prices U.S. companies receive for their goods and services fell in May, offering evidence that inflation is mild.
The producer price index, which measures the cost of goods and services before they reach the consumer, dropped 0.2 percent last month, the Labor Department said Friday. The decline was driven lower by cheaper food and gas, and follows two months of strong gains that had suggested inflation might be perking up after being dormant for two years.
In the past 12 months, producer prices have risen 2 percent, matching the Federal Reserve’s inflation target. That’s down from an annual gain of 2.1 percent in April.
"The underlying details of the report suggest that producer price inflation is still fairly contained despite the big increases in the last few months," Omair Sharif, an economist at RBS Securities, said in a research note.
Excluding the volatile food, energy and profit margin categories, core producer prices were unchanged in May. The result comes after a 0.3 percent gain in each of the two preceding months. Core prices have risen 2 percent in the past year.
Wholesale food prices fell 0.2 percent after four months of steep increases. And wholesale gas prices dropped 0.9 percent, suggesting consumers may see some relief at the gas pump in coming months.