US producer prices slip 0.2 per cent in May on cheaper gas and food, a sign inflation is tame

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In this Thursday, March 27, 2014 photo, John Pittenger tosses up a pizza dough at the Whole Foods Market in Woodmere Village, Ohio. The Labor Department releases its May report on producer prices on Friday, June 13, 2014. (AP Photo/Tony Dejak)

WASHINGTON – The prices U.S. companies receive for their goods and services fell in May, driven lower by cheaper food and gas, evidence that inflation is mild.

The Labor Department says the producer price index, which measures the cost of goods and services before they reach the consumer, dropped 0.2 per cent last month. The decline follows two months of strong gains that had suggested inflation might be perking up after being dormant for two years.

In the past 12 months, producer prices have risen 2 per cent, matching the Federal Reserve’s inflation target.

Retailer and wholesaler profit margins fell 0.5 per cent after two months of strong gains. Excluding the volatile food, energy and profit margin categories, core producer prices were unchanged in May and also rose 2 per cent in the past year.

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