WASHINGTON, May 15 - U.S. wholesale prices posted their biggest drop on record last month as energy prices plunged and the costs of cars, light trucks and cigarettes fell, the government said on Thursday in a report that showed prices falling much more than Wall Street expected.
The producer price index, which measures prices paid at the factory, farm and refinery gate, plummeted 1.9 percent in April, the biggest drop on records dating to 1947, the Labor Department said. Much of the decline was due to an 8.6 percent fall in energy prices. However, the so-called core PPI, which strips out volatile food and energy costs, also tumbled sharply, falling 0.9 percent on the back of drops in prices for cars, SUVs and other light trucks, and cigarettes. It was the largest decline in core PPI since August 1993. The report was likely to fuel concerns over the possibility of deflation, or a widespread decline in consumer prices. Economists polled by had expected the PPI to drop just 0.6 percent with the core rate down just 0.1 percent.//