U.S. wholesale prices recorded their biggest drop in three years in April as gasoline and food costs declined, the government reported Wednesday, indicating inflation has slowed. The Labor Department said its producer price index (PPI), which measures price changes before they reach the consumer, fell 0.7 percent last month, the biggest decrease since February 2010. Wholesale prices had dropped 0.6 percent in March. Wholesale gasoline prices fell 6 percent in April after tumbling 6.8 percent the previous month, and home heating-oil costs fell by the most in nearly four years, helping to push wholesale energy prices down 2.5 percent. Lower energy prices accounted for more than 80 percent of the decline in PPI last month. Wholesale prices also were pushed lower by a 0.8 percent decline in food prices, the biggest drop since May 2011. Excluding the volatile energy and food categories, core PPI rose 0.1 percent last month, following 0.2 percent gains in each of the previous four months. In the 12 months ending in April, wholesale prices were up only 0.6 percent, the smallest year-over-year increase since July 2012. Core PPI has risen 1.7 percent over the past 12 months. The report was the latest indication of a tame inflation environment. Consumer inflation was weak in March, with a measure closely watched by the Federal Reserve (Fed) slowing sharply below its 2 percent target over the 12-month period. With little sign of wholesale price pressures, consumer inflation should remain low this year. Low inflation gives the Fed room to maintain its monthly $85 billion purchases of mortgage and Treasury bonds to keep long-term interest rates low and spark job creation.
