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By Bloomberg

Wholesale prices in the U.S. unexpectedly declined in April from the prior month, indicating inflation is well-contained as Federal Reserve officials weigh when to raise the benchmark interest rate.

The 0.4 percent drop in the producer-price index followed a 0.2 percent gain in March that was the first increase in five months, a Labor Department report showed today in Washington. The decrease exceeded the lowest estimate of economists surveyed by Bloomberg. Over the past 12 months, wholesale prices fell 1.3 percent, the most in records dating back to 2010.

Businesses have seen muted wholesale costs as a plunge in energy prices in the second half of 2014 and a stronger dollar boosted by subdued growth abroad limit inflation early in the pipeline. Fed officials are looking for signs that price growth will rise toward their goal as they consider raising rates for the first time in nine years.

“We still don’t have complete confidence that inflation is going to start reverting back toward target,” Brittany Baumann, a New York-based economist at Credit Agricole CIB, said before the report. “We have to remain cautious at this point.”

The median estimate in a Bloomberg survey of 74 economists called for a 0.1 percent increase. Projections ranged from a drop of 0.2 percent to a 0.4 percent advance.

Another report today showed fewer Americans than forecast filed applications for unemployment benefits last week, pushing the average over the past month to the lowest level in 15 years and underscoring labor-market strength.

Fewer Claims

Jobless claims decreased by 1,000 to 264,000 in the seven days ended May 9, according to data from the Labor Department. The median forecast of 53 economists surveyed by Bloomberg projected 273,000. The four-week average, a less-volatile measure, was the lowest since April 2000.

The year-over-year drop in producer prices followed a 0.8 percent decline in the 12 months through March.

The report showed fuel costs decreased 2.9 percent last month and food expenses fell 0.9 percent.

The PPI excluding volatile food and fuel prices decreased 0.2 percent from the prior month, depressed by falling profit margins at wholesalers and retailers. The measure was forecast to rise 0.1 percent after a 0.2 percent increase in March.

The core index increased 0.8 percent in the year ended April after a 0.9 percent gain.

Eliminating food, energy and trade services, which some economists prefer because it strips out another one of the most volatile components of PPI, costs rose 0.1 percent last month after a 0.2 percent advance in March. They climbed 0.7 percent from April 2014 after a 0.8 percent gain.

The personal consumption expenditures index, the Fed’s preferred inflation gauge, rose 0.3 percent in March from a year earlier and has been below the Federal Reserve’s 2 percent goal since May 2012. The core measure increased 1.3 percent in the 12 months ending in March.

Fed officials are monitoring inflation and labor-market progress as they debate when to raise the benchmark interest rate for the first time since 2006. The first increase will take place after the policy makers’ meeting in September, according to 73 percent of economists in an April 22-24 Bloomberg survey.

Today’s producer price index reading is one of three monthly inflation gauges from the Labor Department. The CPI, due for release May 22, rose 0.1 percent in April, according to the Bloomberg survey median. A report Wednesday showed the cost of imported goods fell 0.3 percent last month, marking the 10th straight decline as the dollar rose overseas economies cooled.