On Thursday, the Labor Department revealed that wholesale prices in the United States dropped during May. This is another indication of decreasing inflation, which comes on the heels of the Federal Reserve’s decision to maintain interest rates on Wednesday.
In May, the producer price index, which is the preferred inflation measure of the Fed, experienced a significant decline of 0.2%. This is the largest drop in the producer price index so far this year and the most significant decrease since last October when the PPI fell by 0.3%.
Related posts
In May 2023, there was a 2.2% increase in the PPI on a yearly basis.
Contrary to Wall Street’s forecast of a 0.1% rise, the index actually saw a monthly decline, albeit a lower one, following a 0.5% increase in April.
In the past year, the PPI has only shown a decrease compared to the previous month on four occasions.
In May, the demand for goods saw a significant decline of 0.8%, marking its biggest drop since October 2023 when it fell by 1.2%. Energy prices for final demand experienced a sharp decrease of 4.8%, while food prices saw a slight dip of 0.1%. However, the core PPI, which excludes food and energy, showed a minor increase of 0.1%.
In May, the Labor Department reported that final demand services remained unchanged, following a 0.6% increase in April. The indexes for trade services experienced a 0.2% rise, while services, excluding trade, transportation, and warehousing, saw a notable increase of 1%.
In May’s services index, the retail margins for fuel and lubricants saw a significant increase of 12.2%, whereas prices for airline passenger services experienced a decline of 4.3%.
Inflation appears to be on the decline, with the latest report providing more positive news. The consumer price index for May was released on Wednesday and remained unchanged from the previous month, which was unexpected but welcome news. This report adds to the growing evidence that inflation may not be as much of a concern as some had feared.
On Wednesday, Jerome Powell, the Chairman of the Federal Reserve, announced that inflation had decreased from its peak of 7% to 2.7%. However, he emphasized that this rate was still too high. While keeping interest rates steady, Powell hinted that there could be a potential interest rate cut by the end of the year.
