Producer Prices Off 0.6%

Washington, DC, June 14–The producer price index fell a sharp 0.6% in May, with about three-quarters of the drop due to the sharpest decline in energy prices in two years, according to the Labor Department.

It was the biggest one-month decline since April 2003.

The core index, which excludes food and energy costs, rose 0.1%.

Economists had forecast a drop of 0.2% in the PPI and an increase of 0.2% in the core index.

The decline reverses the 0.6% rise in the PPI in April, with the core rate up 0.3%.

Over the past year, the PPI has risen 3.5%, the smallest year-over-year increase since last September. The core rate is up 2.6% over the past 12 months.

In May, energy prices fell 3.5%, the biggest decline since April 2003. Food prices fell 0.3%, the first decline since January.

Passenger car prices slipped 0.2% in May, while light motor truck prices fell 0.9%.

Partially offsetting these declines was a 2.2% increase in construction machinery, the largest increase since January 1980.