The producer price index for final demand rose 0.2% last month, the Labor Department said on Thursday. Data for March was revised slightly to show the PPI dropping 0.4% instead of 0.5% as previously reported.

In the 12 months through April, the PPI increased 2.3%. That was the smallest year-on-year rise since January 2021 and followed a 2.7% advance in March. The annual PPI rate is slowing as last year's large increases fall out of the calculation.

Economists polled by Reuters had forecast the PPI climbing 0.3% from the prior month and rising 2.4% on year.

A 0.3% increase in the cost of services accounted for 80% of the rise in the monthly PPI. Services where boosted by a 4.1% advance in portfolio management fees.

There were also increases in the costs of food and alcohol wholesaling, outpatient care, loan services as well as hospital inpatient care, hotel and motel rooms. But the cost of long-distance motor carrying fell as did food retailing and securities brokerage, dealing and investment advice.

Services prices dipped 0.1% in March. Goods prices rose 0.2% in April after declining 1.0% in March. They were driven by an 8.4% surge in gasoline prices. Food prices fell 0.5%.

Excluding the volatile food and energy components, core goods prices rose 0.2% after a similar gain in March.

The government reported on Wednesday that the annual increase in consumer prices slowed to below 5% in April for the first time in two years.

The Fed has raised its benchmark overnight interest rate by 500 basis points to the 5.00%-5.25% range since March 2022 and last week signaled it could pause its fastest monetary policy tightening campaign since the 1980s.

Excluding food, energy and trade services components, producer prices gained 0.2% in April after edging up 0.1% in March. In the 12 months through April, the core PPI rose 3.4% after increasing 3.7% in March.