The Department of Labor said its producer price index (PPI), which measures inflation at the wholesale level, was flat in May following a 0.5% monthly gain in April. Rising energy prices along with a bump in other commodities had been pushing producer prices up, but the trend weakened last month.
Prices rose in May for some services, including car rentals. Prices for jewelry, footwear, and accessories also increased. But energy prices fell 3%, the biggest decline in more than a year, and wholesale gasoline prices fell 11.2%. Food costs also declined, with the price of fresh fruits and melons falling the most since June 2010, Reuters reports. Meanwhile, the cost of beef and veal increased by the most since July 2008.
Excluding energy, food, and retail trade margins, the so-called core PPI fell 0.1% in May
Overall, though, producer prices are up 2.4% over the past twelve months.
“Inflation down at the producer level of the economy’s factory-to-consumer supply chain remains on the warm side, which is in keeping with the economy moving beyond full employment,” said Chris Rupkey, chief economist at MUFG, according to a report from Reuters.
The announcement comes as the Federal Reserve meets to consider raising the federal funds rate amid a relatively strong job market, the Associated Press reports.
Most analysts think the Fed will raise the funds rate another 25 basis points on Wednesday after a 25-basis-point hike in March. Economists expect the U.S. central bank to raise rates a total of three times this year, which means one more additional rate increase after June’s projected hike. The Fed raised rates once each in 2015 and 2016, both times at the December meeting.