Wholesale prices fell for a second consecutive month in May - the first time that has happened in a year - as the cost of energy plummeted, the government reported Wednesday. The Labor Department said its producer price index (PPI), which measures costs at the wholesale level, fell 0.3 percent last month following a 0.1 percent drop in April. Analysts had expected a 0.5 percent decline for May. PPI is 5.3 percent higher than a year ago. Core PPI, which excludes volatile energy and food costs, rose 0.2 percent. However, core prices are up only 1.3 percent over the past 12 months. The continued absence of inflationary pressures means the Federal Reserve (Fed), which meets next week, can keep interest rates historically low to provide support for the economic recovery. In May, energy prices fell 1.5 percent, the biggest drop since a 2.2 percent fall in February. Gasoline prices plunged 7 percent, while home heating oil fell 7.4 percent and residential natural gas was down 1.1 percent. The lower energy prices reflect a continued decline in global oil prices, which have been dropping because of worries that the European debt crisis will limit growth in key regions of the world. Economists expect energy costs will keep inflation low in June, as well, because gasoline prices are down significantly from a month ago. Food costs fell 0.6 percent last month, the sharpest decline since a 1.3 percent drop in July 2009. The decrease was led by an 18 percent drop in the cost of fresh vegetables, a category where prices had been driven higher because of damaging freezes earlier in the year in Florida.
