U.S. producer prices fell sharply in May as energy costs dropped the most in over three years, the government said in a report Wednesday that signaled easing inflationary pressures. The Labor Department said its producer price index (PPI), which measures inflation before it reaches consumers, fell 1.0 percent last month. The drop was the sharpest since July 2009, marked the second consecutive month of declines, and left wholesale prices 0.7 percent higher in May than a year earlier-the weakest inflationary pressure since October 2009. The May PPI drop was mostly because of a 4.3 percent plunge in energy prices, the biggest decline since March 2009. The European debt crisis is threatening global economic growth, pushing oil prices lower. Last month, U.S. gasoline prices fell 8.9 percent, while prices also declined for residential natural gas and liquefied petroleum gas, the report said. Wholesale prices excluding volatile energy and food costs rose in line with economist expectations in May, up 0.2 percent. The core PPI reading was pushed higher by a 0.7 percent increase in the index for pharmaceuticals. In the 12 months ending in May, core producer prices increased 2.7 percent, matching April's reading. Analysts had expected the core year-over-year reading to rise to 2.8 percent.
