Washington: Wholesale prices in the US unexpectedly fell in May, suggesting demand isn't robust enough to push inflation closer to the Federal Reserve's target.
The 0.2 per cent decrease in the producer price index compared with the median estimate in a Bloomberg survey of 71 economists that called for a 0.1 per cent gain. Over the past 12 months, costs climbed two per cent, figures from the Labour Department showed Friday.
The May dip, the first in three months, suggests pricing power hasn't yet materialised as the global economy is slow to accelerate. Muted costs are a problem for Federal Reserve policy makers, who have said they want inflation to increase closer to their two per cent goal, a sign they will keep interest rate low well into 2015.
The May PPI decrease followed a 0.6 per cent gain the prior month. Forecasts in the Bloomberg survey ranged from a drop of 0.3 per cent to a 0.5 per cent gain.
The advance from the same month a year before was smaller than the 2.1 per cent rise in the year to April.
Wholesale food expenses decreased 0.2 per cent in May as the cost of pork slumped 5.1 per cent, the most since April 2012. This followed gains of 20.6 percent in April and 7.2 per cent in March that resulted from a drop in supply due to a disease afflicting pigs.
At Heathrow, Florida-based Ruth's Hospitality Group, whose brands include Ruth's Chris Steak House, higher beef prices have pressured margins.