Inflationary pressures continue to ease, producer prices drop 0.3%

Wholesale prices in the United States dropped 0.3 per cent from April to May, another sign that inflationary pressures continue to ease in the face of repeated interest rate hikes by the Federal Reserve.

The Labor Department's producer price index, which measures inflation before it reaches consumers — rose 1.1 per cent last month from May 2022, it said Wednesday, the smallest year-over-year gain since Dec. 2020.

Excluding volatile food and energy prices, so-called core wholesale inflation was up 0.2 per cent last from April and 2.8 per cent from a year earlier.

Unleashed by an unexpectedly strong economic recovery from 2020's COVID-19 recession, inflation began to rise in 2021 and last year reached levels not seen since the early 1980s. In response, the Fed has raised its benchmark interest rate 10 times in the past 15 months. At their meeting Wednesday, Fed policymakers are expected to leave the rate alone to give themselves time to assess the impact the aggressive rate hikes have had on the economy.

Inflation has been receding. Year-over-year increases in producer prices peaked at 11.7 per cent in March 2022 and have fallen 11 straight months.

On Tuesday, the Labor Department said that its consumer price index rose just 0.1 per cent last month from April and 4 per cent from a May 2022 — the lowest 12-month figure in two years and down from a 4.9 per cent increase in April.