Wholesale Inflation Unexpectedly Slips in April

Producer prices unexpectedly fell in April as energy costs dropped by the most in six months, a sign of easing inflation pressures that could give the Federal Reserve more room to help the economy should growth weaken.

The Labor Department said on Friday its seasonally adjusted producer price index dropped 0.2 percent last month. That was the first drop of the year and the biggest decline since October.

Economists polled by Reuters had expected prices at farms, factories and refineries to be flat.

The decline left wholesale prices 1.9 percent higher in April that a year earlier, the weakest reading since October 2009.

Wholesale prices excluding volatile food and energy costs rose in line with economist' expectations, up 0.2 percent after March's 0.3 percent gain.

The drop in PPI was due to a 1.4 percent decline in energy prices, the biggest drop since October. Gasoline costs slumped 1.7 percent while prices also fell for residential natural gas and liquefied petroleum gas.

The producer price index outside food and energy was pushed up by a 0.4 percent increase in the index for pharmaceuticals. Higher prices for civilian aircraft also pushed up the core index.

In the 12 months to April, core producer prices increased 2.7 percent after rising 2.9 percent the previous month. April's reading was the lowest since August and just below analysts' expectations.