The Producer Price Index (PPI) for final demand in the US saw a decline in annual inflation to 2.2% in May, according to data released by the US Bureau of Labor Statistics on Thursday. This figure fell short of market expectations of 2.5% and marked a slight decrease from the 2.3% increase recorded in April.
Annual core PPI, excluding volatile food and energy prices, also experienced a dip to 2.3% in May, coming in below both April's figures and market forecasts of 2.4%. On a monthly basis, the overall PPI showed a 0.2% decline, while the core PPI remained unchanged.
The market reaction to the PPI inflation data was characterized by modest selling pressure on the US Dollar, resulting in a retreat of the US Dollar Index to around the 104.70 level from its daily high near 105.00. This reaction suggests that investors are interpreting the lower-than-expected inflation figures as potentially influencing the Federal Reserve's monetary policy decisions moving forward.
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